Binding Financial Agreement: A Complete Guide

A BFA is a legal agreement between two parties in a marriage or de facto relationship that stipulates how their assets, financial resources, and debts will be distributed in the event of a relationship breakdown. BFAs offer a certain level of predictability and control over your financial future post-separation.

1. Financial Certainty: BFAs provide parties with certainty about their financial situation should their relationship end. It establishes a clear blueprint for the distribution of assets, helping individuals to plan their financial future post-separation.

2. Security: Through a BFA, parties can protect their assets, including those brought into the relationship, inherited assets, and family gifts. This is particularly beneficial for parties entering into second or subsequent relationships.

3. Flexibility: BFAs allow for flexibility and can be tailored to suit individual circumstances. They can encompass a broad range of financial matters, including property, spousal maintenance, superannuation, and other financial resources.

4. Avoidance of Court Proceedings: BFAs can help prevent the often time-consuming and expensive process of court disputes over property and financial matters, potentially saving both parties significant stress, time, and money.

5. Moving in as a De Facto Couple: If you're moving in together as a de facto couple, a BFA can provide a framework for how property and finances would be fairly distributed in the event of separation.

You can enter into a BFA before, during, or after a marriage or de facto relationship. It's often prepared pre-emptively (pre-nuptial agreement), but can also be arranged during the relationship or post-separation.

If you and your ex-partner are in amicable terms, it is advisable that you enter into a BFA at the initial stages of separation, while resolutions could be arrived at an early stage without the need for litigation.

1. Full and Frank disclosure requirement: Initiating the BFA process involves both parties meticulously gathering and disclosing all financial information, including assets, liabilities, income, and superannuation. Honesty is paramount; any concealment or underestimation of assets could jeopardize the agreement's validity.

2. Independent Legal Advice: While it might seem convenient, both parties cannot share the same lawyer when preparing a BFA. Independent legal advice is mandatory for each party, ensuring a clear understanding of their rights, obligations, and the consequences of the agreement.

3. Drafting the Agreement: The BFA is drafted according to the mutually agreed terms and conditions that have been discussed between both parties and their lawyers.

4. Execution of the Agreement: Once both parties guided by their respective lawyers, reviews its terms thoroughly and agreed to its terms, the BFA is signed. Upon agreement each lawyer issues a certificate verifying that their client has received independent advice regarding the agreement's implications. Consequently, the signed and certified BFA takes effect, becoming a legally binding document.

5. Safekeeping of the Agreement: As the final step, it is imperative for both parties to securely store a copy of the executed BFA, ensuring its accessibility for future reference.

Superannuation is a crucial financial asset that can be addressed within a Binding Financial Agreement. BFA can stipulate how superannuation benefits are to be divided, which could involve a specified amount being rolled over from one party's superannuation fund to the other's, or set proportions being agreed upon.

BFAs can also address the maintenance of a party or children to a relationship post-separation. Spousal maintenance provisions are tailored to the needs and resources of each party, considering factors like age, health, income, future needs of the parties and potential ability to earn. However, once a BFA is in place, a party cannot apply to a court for a maintenance order unless the BFA is set aside.

Similarly, child maintenance terms can be included, but parties should note that these provisions must meet the relevant legal requirements to be considered valid on a BFA.

A BFA can be terminated by a subsequent agreement between the parties, provided that the new agreement satisfies the same legal formalities as the original. Courts can only set aside BFAs under certain circumstances, such as fraud, impracticality, or undue hardship to a child.

While BFAs can bring a sense of security and certainty, their preparation and implications are complex. It's essential to have a sound understanding of your rights and obligations, and to seek expert advice tailored to your unique circumstances.

This guide serves merely as an introduction to the extensive topic of BFAs. For more individualised guidance, we strongly recommend reaching out to our proficient team specialising in family law. We pride ourselves on providing a compassionate, understanding service, ensuring your needs and rights are front and centre. Partner with us, and face this challenging phase with confidence and expert support.