Binding Financial Agreements
The Family Law Act makes provision for binding financial agreements (BFA) between parties to a marriage or de-facto relationship. These agreements set terms for the way property and assets will be divided if a marriage or de-facto relationship breaks down.
Agreements can be entered into before, during or after the relationship and can be changed over time as the relationship changes.
BFAs that are well drafted and have been given proper consideration can allow couples to start, or continue their relationship, knowing that the financial matters have been agreed should the relationship break down. This can be particularly helpful to someone that may have already suffered a relationship separation.
BFA’s can cover all financial matters of the parties including property, superannuation and any other financial resources. It can also include spousal maintenance from one party to the other.
A BFA cannot cover parenting arrangements or child support payments. For information regarding these issues CLICK HERE
There are certain requirements that need to be met for a BFA to be binding. The BFA must be in writing and be signed by both parties. Both parties must obtain independent legal advice about the terms and outcomes of the agreement, and the lawyer providing the independent advice must sign a statement confirming that they have given this advice.
A BFA must strictly comply with legislation as they are at risk of easily being set aside by the court. They need to be drafted well to ensure that a court would consider the agreement ‘just and equitable’.
The court may to set aside a BFA in the following circumstances:
- Fraud: this means that one person has tricked or deceived the other into entering into the agreement, or that one person has not disclosed something relevant.
- Unconscionable conduct: this means that one person has behaved in a way that may have been particularly harsh, unfair or oppressive, termed ‘against conscience’.
- If over time circumstances have changed so much that it would be impractical to carry out the agreement;
- If a change has occurred relating to a child, and the parent caring for the child will suffer hardship if the agreement is not set aside;
- If superannuation has not been adequately arranged.
WHAT IS INVOLVED?
Both parties must carefully consider what they want the agreement to say, how they will arrange their finances during the marriage and how they would like the property to be dealt with if the relationship breaks down. Parties should have a conversation discussing plans including:
- Whether children are planned;
- If there are existing children to one party;
- Whether both or one party will work;
- How expenses and financial commitments throughout the marriage will be met;
- What may happen if either party is unable to work because of illness or injury;
- If a provision regarding inheritance should be included;
- Both parties’ retirement considerations;
- Whether you will have a joint bank account.
Our experienced lawyers can assist you with all stages of this process, from planning what your BFA might look like, to drafting and finalising it. Contact us today to find out how we can help.