Binding Financial Agreements
(Formerly known as Prenuptial agreements)
What is a Binding Financial Agreement (“BFA”)?
A BFA is an agreement between two or more individuals. The BFA must comply with the Family Law Act 1975 (Cth).
A BFA may be created and entered into, before the marriage, during the marriage, and after a breakdown. A BFA covers the division of property between the parties involved and includes superannuation and/or spousal maintenance. The BFA outlines how the parties are to deal with their financial matters and therefore the purpose of entering into a BFA is to avoid the need to go to court to deal with the division of property.
The BFA entered before marriage is also commonly known as a prenuptial agreement. This agreement would outline how the parties are to distribute their property in the event that the relationship does not work out and in the event of separation.
Who can enter into a Binding Financial Agreement
BFA’s can be entered into by married couples and de facto couples. As same-sex relationships are now recognized, both same-sex and heterosexual couples are able to enter into BFAs.
Why should you seek legal advice?
There are a variety of requirements that must be met for a BFA to be binding and enforced. This means that the BFA’s must be drafted with care in order to comply with the requirements of the Family Law Act 1975 (Cth).
If you and your partner wish to prepare the BFA on your own, it is very important that you seek legal advice to ensure it has been drafted in accordance with the Act and also to ensure you seek legal advice on the outcome of the BFA. Each party should seek independent legal advice.
In order for a financial agreement to be legally binding, both parties wishing to enter into the agreement must sign the agreement and obtain independent legal and financial advice prior to signing the agreement. Independent legal advice is when each party obtains their own solicitor to advise them.
It is important to keep in mind that a financial agreement can be set aside. Under the Family Law Act 1975 (Cth) the court can set aside the agreement for the following reasons:
·Void/unenforceable (mistake, misrepresentation, duress etc);
· Fraud (failing to disclose material)
· Creditor’s interest;
· Impracticable (should there be a change in circumstances);
· Unconscionable conduct;
· Hardship (change to a child/ren and the agreement if continued would cause hardship);
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