BINDING FINANCIAL AGREEMENT – FAMILY LAW
Did you know a Binding Financial Agreement (BFA) is a written agreement which complies with the Family Law Act 1975 which may be entered into by either a married couple or de-facto couple. The provisions under the Act pertaining to married couples are effectively the same as those pertaining to de-facto couples except they fall under different parts of the Act.
Part VIIIA governs financial agreements between married couples. This agreement can be entered into during any of the three stages of the relationship, namely: before marriage (prenuptial agreement); during marriage (postnuptial agreement) and after the marriage breakdown (separation agreement). Prenuptial agreements are more commonly entered into to protect the assets of the wealthier party in the event of a marriage breakdown. However prenuptial and postnuptial agreements can also help a couple manage their individual property during the course of their relationship, even if there is no anticipated end in sight. Separation agreements are an easier and more cost effective alternative to consent orders which must be processed through the courts. The separation agreement can be made by one or both parties to the marriage but must be signed by both.
Part VIIIAB of the Act governs financial agreements made between a de-facto couple. Like married couples, de-facto couples can enjoy the flexible time period in which the financial agreement can be entered into – either before or during the relationship or after the relationship breakdown.
The Contents of a BFA
Financial Agreements are primarily concerned with the management of:-
· Personal property and/or real property of each member of the relationship
· Matrimonial property or property belonging to both parties of the relationship (property attained during the course of the relationship)
· Financial resources of one or both parties to the relationship
The BFA may also deal with children and maintenance matters.
Requirements of a BFA in order for it to be Binding
Although a BFA can be drafted by one party of the relationship, it is essential that the agreement is in writing and both parties agree to the BFA and sign the document otherwise it will not be binding. Proof of duress or fraud may make the agreement void.
It is essential that before the agreement is entered into, each party has had independent legal advice and the respective lawyers have annexed a certificate stating that advice was provided.
Both parties to the agreement must be candid and make full honest disclosure of their assets and their financial position. If an agreement is made on the basis of false information from either party, it will be rendered unenforceable.
Both parties must have a copy of the agreement within their possession.
Although the BFA can be made and enforced without the court’s assistance, a court may have jurisdiction to scrutinize the BFA where a party to the agreement submits that the BFA in content and/or in the manner of its creation is unjust and inequitable. Some circumstances that may give rise to a court terminating the agreement include:-
- It is impracticable to enforce the agreement for whatever reason.
- There has been a material change since the agreement which may cause hardship for one or more people who are party to the agreement.
- When making the agreement, a party engaged in unconscionable conduct.
A Binding Financial Agreement provides both married and de-facto couples with the option of protecting their assets, real property and financial resources amicably and between themselves. This is no doubt an efficient and cost effective means and will give much security and peace of mind to the parties involved.