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Binding Financial Agreements

What is a Binding Financial Agreement?

A binding financial agreement (BFA) is an agreement which takes into account the division of assets, and if required, spousal maintenance, if the relationship were to break down. A BFA includes a brief background of the relationship, assets that each party had prior to the commencement of the relationship, assets the parties acquired during the relationship, and what assets will be retained by each party after the relationship has ended.


Our Family Lawyers have extensive expertise in the preparation of Binding Financial Agreements in both prenuptial (pre-nup) and post relationship (post-nup) scenarios, to assist you in protecting your interests.


A BFA should clearly set out what each party will receive in the property settlement, including any payments of spousal maintenance.


As a BFA can only deal with the division of assets, it excludes and does not cover parenting and child custody matters. A BFA can be entered into at any time during the relationship, such as before living together, and even after separation or divorce.

A BFA can be a very cost effective and time effective method of formalising how the parties decide to divide the assets, if agreeable, and avoid the unnecessary costs associated with litigating the matter at Court. Alternatively, Consent Orders can be prepared and made by the Court which can deal with parenting and child custody matters, if appropriate.

 

For a BFA to be legally enforceable, it is imperative that each party obtains independent legal advice. Without a solicitor’s certificate incorporated for each spouse of the agreement, the BFA is invalid.

Advantages of a Binding Financial Agreement

  • If your BFA is drafted and executed prior to separation or divorce, the parties have the advantage of their negotiated positions already being set out in a written agreement, which can remove or reduce the emotional aspects (and the legal disputes) of the separation or divorce.
  • As long as each party receives independent legal advice, then the parties can generally divide the assets in question in a manner which is consistent with the BFA. This can be contrasted to Consent Orders which are considered by the Court, and must be determined to be just and equitable for the Orders to be made by the Court.
  • If a BFA is in place, it ensures that each party is clear on how each asset will be divided, in the event that a separation occurs.
  • If you have a valid BFA in place, it should eliminate the need for the matter to require the assistance of the Court for determination, if your relationship were to deteriorate.
  • If you have previously experienced a bad relationship breakdown, a BFA can be very reassuring that your assets, and your position will be protected, post separation.
  • If you find that you have more, or less assets than your partner, your assets and financial position will be protected, post separation.

Disadvantages of a Binding Financial Agreement

  • Each party must obtain their own independent legal advice, explaining the advantages and disadvantages of the party signing the BFA. A Family Lawyer for each party must sign a declaration within the BFA which states that this advice was provided, otherwise the BFA may be unenforceable.
  • Any ambiguous terms can be interpreted to favour the party that did not draft the BFA.
  • An application to the Court to enforce a BFA may be difficult as the Court will need to determine that the BFA is both valid and enforceable.

If one party has little to no assets, speaks poor English, or does not have their own lawyer to advise them on the terms of the BFA, then the risk of the agreement being invalid is greater.


As an alternative to a BFA, read more about Consent Orders here.

Frequently Asked Questions

Can a Binding Financial Agreement be modified?

If you and your partner are in agreement, the BFA can be revised every few years, or when circumstances change (such as having children).

What if he/she won't sign?

After discussions with the other spouse or their lawyer, we can often resolve issues through negotiation. Cooperation is key to both parties signing and complying with the BFA.

What if I am expecting a large inheritance in the future?

If expecting large inheritance in the future, you can make a BFA (pre-nup) that will exclude your partner from claiming said inheritance.

Can I exclude certain assets in a Binding Financial Agreement?

Yes, a BFA can exclude specific assets and/or properties, such as pre-marriage assets that you have acquired on your own and wish to exclude your partner from making a claim to them if the relationship were to fail.

Yes, as circumstances change, nothing remains 100% certain. If your circumstances changed, such as where there had been a child born since the execution of the BFA, or there was a failure to disclose certain information, then the BFA may be scrutinised by the Court and found not to be valid.

Book your 100% free no obligation consultation call with one of our Lawyers today.

We will:

  • Review your matter
  • Answer any questions
  • Discuss your rights and options
  • Provide steps to resolve your matter