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.
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.
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
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.
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.