Bringing certainty to your financial matters
A Binding Financial Agreements can reduce worry and create financial certainty for your future.
What is a Binding Financial Agreements?
A Binding Financial Agreement (BFA) is a legally financial binding agreement between a certain number of parties, which is made in line with the stipulations of the Family Law Act. In this case, a BFA is an agreement regarding the division of property between the parties of a divorce, and regulates how the parties involved will divide property, superannuation and how spousal maintenance will be managed.
A BFA removes the need for parties to go to Court to settle property or financial matters in dispute and prevents parties from making an application to the Family Court of Australia should their relationship break down following the proper execution of a BFA.
Creating a Binding Financial Agreement
BFAs can be entered into by parties to a relationship
- prior to or at the commencement of a relationship
- during the relationship, or
- following a relationship breakdown
But be aware that at each stage, different sections of the Family Law Act will take effect.
There is no statute of limitation on a BFA. You can enter into one if your divorce was finalized more than a year ago, or your de facto relationship has ended more than two years ago.
How you can make sure you have a robust Binding Financial Agreement:
- Provide accurate, detailed information : an agreement should provide for future events, such as what will change in the event of the birth of a child or ill health or one party;
- Make sure each party receives truly independent legal advice from a solicitor, unfettered and free from influence by the other party to the agreement;
- An Australian Legal Practitioner (Solicitor admitted to practice in Australia) must provide the independent legal advice;
- Avoid signing up to a Binding Financial Agreement in circumstances where the ‘free agreement’ of one party may be brought into question, such as the day before a wedding or under threats, e.g. ‘if you do not sign the agreement, I will not support your VISA or permanent residency application’;
- Structure asset holdings to prevent an intermingling of property interests to retain a clear division so that in the event of a separation the terms of the Binding Financial Agreement can be readily applied without complicated interpretation.
Legality of a Binding Financial Agreements
It is of the utmost importance that if you wish to enter into a BFA, it adheres to the requirements as set out by the Family Law Act. These requirements include:
- Before signing the BFA, each spousal party must be provided with independent legal advice that stipulates the effects the BFA will have on their financial rights.
- Each party must also receive a signed statement from their respective legal representatives, stating that legal advice was given. A copy of this statement must also be given to each of the parties or their legal representative.
- The BFA was signed by all parties involved.
- The agreement has not been terminated or set aside by a court of law.
Regardless of what the BFA stipulates, it should be noted that according to a Federal Justice System Amendment made in 2009, the court has extra discretion when declaring a BFA binding. This is the case when the court declares a BFA binding even if it did not comply with all the legislative requirements when it was entered into, if the act of overturning it will be unjust and inequitable.
We provide fixed fees for drafting and advising you on a Binding Financial Agreements. We will assess your circumstances and discuss with you the requirements of your Binding Financial Agreements for ‘no fee’, then we will provide to you a fixed price quotation for preparing your Binding Financial Agreement and providing to you the advice required to make that agreement legally binding.
For more information about a Binding Financial Agreements or how to enter one, get in contact with us today.