A binding financial agreement (BFA) is one way that parties can create a legally enforceable property settlement under the Family Law Act 1975. With over two decades of experience in South West Sydney, we have seen firsthand how a poorly drafted BFA can fall apart years later. They have strict legal requirements and limitations on what can be covered.
At Bateys, you work directly with Bruce ensuring your agreement is built on a foundation of seasoned expertise.
Key takeaways
What is a binding financial agreement
A BFA is a private contract that parties can enter into without having to get the approval of the Federal Circuit and Family Court of Australia (FCFCOA) first. It is available to married couples and parties in a de facto relationship, except de facto couples in Western Australia, who are covered by separate WA state legislation rather than the Family Law Act 1975.
What they can and cannot cover
Parties can generally include the relationship’s entire property pool. This includes assets and liabilities that were accrued prior to, during, and even after the relationship in some cases. Typically, BFAs can involve:
Bank accounts.
Stock portfolios.
Investment properties.
Business interests.
Superannuation.
Personal debts.
Mortgages.
Financial resources, such as an expected inheritance.
Spousal maintenance (or de facto partner maintenance for de facto couples).
Matters that usually are not included in BFAs are:
Parenting arrangements.
Child support.
Clauses binding third parties.
The Bateys Approach: When to Form an Agreement
Unlike court-imposed consent orders, a BFA offers the flexibility to be created at various stages of your life. We often advise clients on:
Pre-Nuptial Agreements: Protecting assets before marriage.
Post-Nuptial Agreements: Providing security during a marriage.
Separation Agreements: Resolving matters after a relationship has ended without the need for litigation.
When a BFA can be made
One advantage of a BFA is that it allows for a lot of flexibility in terms of when it can be formed. Property consent orders can generally only be pursued after a separation or divorce. In contrast, parties may enter a private financial agreement:
Before marriage (pre-nuptial agreement).
During marriage (post-nuptial agreement).
After separating (separation agreement).
Which option is right for you will depend on your personal circumstances.
What makes a BFA valid?
A BFA needs to meet certain criteria for it to be legally binding. These include the following:
It has to be a written agreement.
The parties have to enter the agreement willingly.
Both parties have to obtain independent legal advice from separate lawyers.
The parties need to get a signed statement from their lawyer showing they got legal advice.
While it is technically possible to draft a BFA without full financial disclosure, failing to do so can make it highly susceptible to legal challenges. Both you and your former partner should fully disclose your financial circumstances, regardless of whether only specific assets will be included in the agreement.
Setting aside a BFA
While BFAs do not require the FCFCOA to approve them when they are formed, their validity can be challenged in court at a later date. The Family Law Act covers when a BFA may be overturned in Section 90K for married couples and Section 90UM for de facto couples. Common reasons for a BFA to be voided include:
One party entered the agreement through coercion or duress.
Financial disclosure did not cover material matters.
It has become impracticable for the agreement to be carried out.
There has been a material change in circumstances related to the care and development of a child.
At least one party did not receive independent legal advice or a signed statement from their lawyer.
The BFA was made for the purpose of defrauding a creditor.
Improperly formed BFAs can cause parties to incur high legal costs. Seek legal advice from a qualified family law firm to reduce the chances of legal issues.
A Note on Full Disclosure
In our 20+ years of practice, we have seen agreements overturned because one party failed to disclose a material financial matter. We use our experience to ensure a transparent disclosure process, making your agreement significantly more “bulletproof” against future legal challenges.
Conclusion
Few family law processes come with more emotional and financial stress than property settlements. Informal agreements can seem like a good idea. But the chances of these arrangements falling apart are significant. Valid BFAs give you a way to organise financial matters in an enforceable way. However, there is a strict legal process you need to follow so you do not run into problems.
Speak with Bruce Today
If you are considering a Binding Financial Agreement or need independent legal advice on an existing draft, don’t leave it to chance. Contact Bateys Law Firm today for a complimentary 20-minute consultation.
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