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What is a binding financial agreement?
A Binding Financial Agreement is a legal document that sets out how the assets of both parties in a relationship are to be divided should the relationship break down.
They are also known as 'pre-nups' 'BFA’s' and 'financial agreements'.
Who can enter into a binding financial agreement?
Both married couples and de facto couples can enter into a BFA.
Same sex couples can also enter into a BFA (they fall into the category of de facto couples).
Do you need a lawyer?
Yes. Each party is required to receive independent legal representation.
Each party must receive independent legal advice and their lawyers must each sign a statement saying this has been provided.
What’s involved?
They are complex documents and must be drafted with great care. This is why experienced lawyers should be used.
What can they cover?
BFA’s can deal with the division of the property and superannuation and they can also be about spousal maintenance.
When can a binding financial agreement be made?
The beauty of a binding financial agreement is that it can be entered into...
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Before a marriage or de facto relationship.
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During a marriage or de facto relationship.
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Or after your marriage or de facto relationship breaks down.
Can they be overturned?
Yes they can. Don’t be fooled by the name “Binding Financial Agreement”!
There have been quite a few cases now where the courts have overturned a binding financial agreement.
There are situations where it is clear that it would be unwise to enter into a BFA, which your lawyer should advise you about prior to signing your BFA.
Are they a good idea?
Whether or not it is a good idea, will depend on your particular circumstances.
They can be expensive, and in certain cases, they can be overturned.
If you're considering a BFA, it is always a good idea to get some independent legal advice from someone who has experience in family law matters and who has prepared numerous binding financial agreements.
Don't be afraid to shop around for a lawyer and ask how many years experience they have, if they practice solely as a family lawyer and how many BFA's would they prepare in a year.
What next?
Every separation has it’s own challenges and there’s a lot of planning that needs to be done.
Be kind to yourself and don’t hesitate to ask for help.
Our Separate Guide can provide you with some peace of mind knowing that you're being guided in the right direction.