What is a Binding Financial Agreement?
A Binding Financial Agreement (BFA) is a legally binding, written agreement between two or more people that complies with Part VIII to VIIIAB of the Family Law Act 1975 (Cth). It sets out the parties’ agreement as to their intended financial arrangements in the event of a breakdown or as a result of a breakdown. The ultimate purpose of a Binding Financial Agreement is to avoid the need of having the matter dealt with by the Family Court.
What does a Binding Financial Agreement cover?
• The division of property, finances and debts after a relationship breakdown
• The division of any inheritance or bequests
• The division of superannuation
• Spousal maintenance
• Other incidental issues
It is important to note that a BFA does not cover the custody of any children within the relationship. This must be handled as a separate matter in Family Court.
The different types of BFAs
The type of Binding Financial Agreement you require will depend on a number of factors such as whether you are already living together, your current relationship status, and whether you intend for that to change. As such, your agreement could be:
• Pre-nuptial agreements (those made in contemplation of marriage)
• Post-nuptial agreements (those made after a marriage)
• Cohabitation agreements (those made in contemplation of, or during a de facto relationship)
• Separation agreements (those made in the breakdown of a marriage or de facto relationship)
• Divorce agreements (those made after a divorce)
What makes a financial agreement “binding”?
For a financial agreement to be binding, it must be signed by all parties. Furthermore, all parties to the agreement must have received independent legal advice before signing the agreement.
Can a financial agreement include parties other than the parties to the relationship?
Yes, a financial agreement can include third parties such as family members, family companies, trusts and creditors.
When family members are involved, a financial agreement could be a way for that family member to protect any money that they may have lent the married or de facto couple.
Those third parties will need to obtain their own independent legal advice and that could increase the costs overall. However, often given the amount of financial assistance given by third parties, those costs are often justified in the long run, based on the protection a binding financial agreement can give a third party.
No one ever wants to contemplate the possibility of their relationship breaking down, but a binding financial agreement will save you stress and heartache if it does happen. If you’re in possession of significant assets, a BFA is a practical way to protect both of your financial futures. Get in touch with the team at AV Lawyers today for experienced guidance.