Binding Financial Agreements
A properly drafted Binding Financial Agreement (a ‘BFA’) is an effective way for a married or de facto couple to specify how their assets are to be divided in the event of a separation.
There are essentially two types of Binding Financial Agreements.
- A Binding Financial Agreement entered into prior to commencing or during the relationship. These agreements are commonly known as prenuptial agreements, where couples can specify at the beginning of the relationship how they wish for their assets to be divided if the relationship does not work out and they separate in the future. This is often a very sensible step to take particularly if one party holds substantial assets that they have acquired prior to the relationship.
- A Binding Financial Agreement entered into after the relationship has broken down. These agreements allow couples to formalise a mutually agreed property settlement into a legally binding and enforceable agreement.
Provided that the specific requirements of the Family Law Act relating to Binding Financial Agreements are complied with then the agreement will be binding on the parties to it and enforceable by a Court.
One of the most important aspects of a Binding Financial Agreement is the need for each of the parties to obtain independent legal advice. The Family Law Act requires that, for a Binding Financial Agreement to be enforceable, it must contain a signed certificate from each party’s lawyer confirming that they have provided that advice to their client.
Whilst there are definite advantages of Binding Financial Agreements in certain situations, it is important to understand they do have some limitations. Also, a Binding Financial Agreement entered into early in the relationship may not now reflect your own expectations of the relationship or what might be a fair outcome in the event of a separation.
Mackinnon Jacobs Lawyers can provide you with detailed advice about your specific situation and as to whether a Binding Financial Agreement will be an appropriate and cost effective solution for your needs.
Challenging a Binding Financial Agreement
Whilst a properly drafted Binding Financial Agreement will be legally binding of its parties, a poorly drafted agreement can be challenged and set aside by the Court.
There are a number of grounds upon which a Binding Financial Agreement may be set aside, such as:
- If the Binding Financial Agreement does not comply with the technical requirements of the Family Law Act;
- If one or both of the parties did not obtain proper independent legal advice before signing the Binding Financial Agreement;
- If, at the time of entering into the Binding Financial Agreement, one of the parties failed to make full disclose of material information or exerted undue pressure or duress on the other party to sign the Binding Financial Agreement.
If you have any concerns about your existing Binding Financial Agreement, contact Mackinnon Jacobs Lawyers for advice about your rights.