Prenuptial and Binding Financial Agreements
A Binding Financial Agreement (BFA), more colloquially known as a prenuptial agreement is a written agreement between a couple. This agreement specifies how you will divide your assets in the event of a separation.
A BFA can be entered into at anytime:
- Before entering into a relationship or
- During a relationship or
- After a couple has separated.
A valid BFA requires each party to get independent legal advise on the agreement from two separate lawyers.
At MJ Legal, we can advise you on your property rights, help you draft a BFA and divide assets to a marriage/relationship in the event of a separation.
Types of Binding Financial Agreements
A BFA is a legal tool that allows you and your partner to control how your finances and assets are treated either during a relationship or in the event of a relationship breakdown.
Pre-nuptial Agreements
Have you asked your partner to move in with you? Or are you contemplating getting married?
You may consider documenting how you and your partner share in the financial resources of the relationship.
You can specify which assets are excluded from the pool of relationship assets and how you will divide assets in the event of a relationship breakdown.
Agreements during the relationship
Did you know that you can enter into a BFA even after being married to your spouse?
Some instances where such an agreement maybe useful are as follows:
- Where you have received an inheritance which is intended only for you.
- You are entering into a business venture together and intend to keep your interest in the business separate from the assets of the marriage.
A BFA is an ideal legal tool to set out any agreements about finance between you and your partner.
Post-nuptial Agreements
Are you undergoing a separation?
A BFA is a cost effective method to divide any assets that you and your ex-spouse have an interest in.
A BFA can take into account assets such as the family home, each party's superannuation interest and any other assets such as interest in stocks and private companies.
Couples can enter into a BFA at anytime after separation.
If you are divorced, you have 1 year following the divorce order to enter into a BFA or 2 years after the breakdown of a de facto relationship to enter into a BFA.
Drafting your BFA with MJ Legal
Step 1
Obtain independent legal advice
Book a consultation and talk to one of our family law experts.
You may have come across the word prenups in most instances, but do you really know it's actual consequences?
At MJ Legal, you will be provided with all the knowledge about prenups and BFAs along with guidance provided at each stage until your BFA is signed and finalized.
Step 2
Full and frank disclosure
You and your ex-partner should disclose your true financial position at the initial stage prior to drafting a BFA.
You are required to disclose assets, liabilities and other financial resources that you have an interest in, both individually and jointly.
Fulfilling the disclosure requirement is considered mandatory in all property settlement procedures. If the requirement is not fulfilled satisfactorily, the BFA could be set aside at a later date.
At MJ Legal, we can assist you with collecting and compiling all the necessary documents to present to the other party.
Step 3
Negotiations between the parties
Separation can be extremely hard. Sometimes, your ex-partner may make negotiations particularly difficult.
MJ Legal has cultivated a reputation for being able to fight for our clients rights and negotiate with difficult ex-spouses.
Once the full and frank disclosure stage is complete, we will assist you in negotiating a fair arrangement to divide the assets of the relationship with your ex-partner.
Often one party will make an opening offer, to which the other party will provide a counter offer. If negotiations are successful and the parties arrive at a satisfactory outcome a BFA can be drafted.
At MJ Legal, our family law experts possess a great wealth of analytical and negotiation skills to assure you the best possible outcome.
Step 4
Drafting your BFA
Once negotiations are concluded and the parties are satisfied with the agreement, you can commence drafting your BFA.
Typically, either we as your lawyers or your ex-spouse's lawyers will draft the BFA, with the other solicitor reviewing it to ensure that all the agreed upon terms are contained in the agreement.
We will consult you extensively to amend the BFA as necessary and finalize it.
Once the BFA is finalized, we will give you robust advise on the effects of the agreement known as 'Independent Legal Advise'.
Upon both parties execution of the agreement, it will become binding and allow the parties to transfer properties to a marriage according to the agreement.
Requirements to enter into a Binding Financial Agreement
Fulfill the mandatory Full and Frank disclosure requirement according to Family Law Rules.
Negotiate and agree on the terms of a BFA.
Each party must obtain independent legal advise from a family lawyer, stating that:
The clients have been advised on the advantages and disadvantages of entering into a BFA and
The effect of the agreement on the rights of that party.
Advantages of entering into a Binding Financial Agreement
Functions as a safety net to avoid any potential disagreement with regard to property distribution and spousal maintenance following a separation or divorce.
Breaching a clause in the BFA would have significant consequences that will allow you to bring action against the party who breaches it.
A BFA may provide for maintenance of an ex-partner or a child in the relationship.
If such arrangement is to be made, one must clearly state in whose favour such maintenance is provided together with a specified sum.
A BFA could protect your assets inherited as well as any assets which you are on the verge of inheriting and may protect you and your ex-partners from each other's liabilities.
FAQs
Yes, if you have adequate knowledge you can draft your own BFA and then obtain independent legal advice on the agreement you drafted.
However, we recommend seeking legal assistance in drafting the agreement. This will avoid any issues surrounding fairness of the agreement and proper disclosure of each other's financial position.
A Binding financial agreement colloquially known as a prenup, is a written agreement between you and your ex-patner outlining the division of property after separation or divorce.
It needs to be signed by both parties involved and requires both parties to receive independent legal advise certificates from 2 solicitors.
Yes, BFAs can be set aside by the court if the judges believe that the agreement was entered into in an unfair manner to one party or where there was a significant power imbalance between the parties.
This is one of the main reasons why both parties should obtain independent legal advice by two independent solicitors prior to providing their agreement to enter into a BFA.