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Binding Financial Agreement

What is a Binding Financial Agreement?

A Binding Financial Agreement (BFA) is a written agreement, which complies with Part VIIIA of the Family Law Act 1975 (“the act”). A Binding Financial agreement can be entered into by a married couple or by two people who plan to be married in the future (in the latter case the agreement is often referred to as a “prenuptial agreement” or “prenup”).

Whilst the primary effect of the agreements is to prevent either party making an application to the Family Court for the division of property, The aim of introducing Binding financial Agreements is to encourage couples to agree about how exactly their matrimonial property should be distributed in the event of, or following, separation’. This can be very reassuring if you have previously been through the breakdown of a marriage before.

Binding Financial Agreements follow the life cycle of a relationship and may be entered into at four separate times:

(i) before marriage (Pre Nuptial pursuant to section 90B);

(ii) during marriage (post Nuptial Pursuant to section 90C);

(iii) during marriage in contemplation of separation (separation pursuant to section 90C);and

(iv) after separation (section 90d).

The popularity of Binding Financial Agreements shows women and men are taking more financial and legal precautions against a relationship breakdown. Most see it as a form of insurance — a legally binding safety net which they hope to never need.

Many people marrying the second time around, with assets or kids from a first marriage, like the security of a pre-nuptial. If you didn’t get round to making one, or if circumstances have changed, couples already married may also make a post nuptial financial agreement. You may even be divorced and find yourself in a situation where you need the certainty of outcome that a Binding Financial Agreement provides.

Your BFA can deal with finances, superannuation, maintenance, property transfers, and debt of the parties among other things, or you may choose to deal with only one of these issues.

Remember BFA are intended to be used at any time during the life cycle of a relationship.

Is a Binding Financial Agreements going to prevent any future court action?

The Agreement will decrease the chance of needing to go to court however, you can never eliminate access to the Court, regardless of how your agreement is worded. If one party hides an important fact the other party can always go back to court and it is up to the court whether it intervenes and overturns the agreement.

One might think that a binding financial agreement needs to be fair to both parties but this is not necessarily the way it is. Should your agreement come before a court, the courts will not dismiss or set an agreement aside simply because it favours one party over the other. This is because section 90G of the family Law Act requires both parties to receive independent legal advice before they sign the agreement. This process ensures that both parties understand the advantages and disadvantages, financially or otherwise, of signing the agreement and it stops either party going to court with the excuse that they didn’t know what they were signing at the time.

When you’re able to sit down with your partner to sort out what your agreement needs to achieve, before you decide to both run of to the lawyers, will save you considerable time, money and anxiety.

Our kit provides all the information you need to drafted a professional agreement before your first meeting This will not only save your legal advisers time as well and that means your costs should be reduced significantly

What ever the stage of your relationship, can provide a BFA template with easy to follow instructions that will save you time and money.