Although we don’t like to think that something might go wrong, relationships can sometimes break down. Without the appropriate safeguards such as Binding Financial Agreements in place you may be at risk of losing your assets.
Understanding Binding Financial Agreements
The purpose of a Binding Financial Agreements is to avoid the need for parties going to court in respect of property and financial matters by agreeing how assets will be divided in the event of separation.
The Family Law Act 1975 provides for parties to a marriage or de facto relationship to enter into a Binding Financial Agreement which becomes effective when a relationship breaks down.
When can a BFA be made and what do they cover?
The beauty of a binding financial agreement is that it can be made at any time. That is, before, during, or after a marriage or de facto relationship.
A BFA can provide for:
- The division of property between the parties;
- Any financial settlement, including any superannuation entitlements;
- Financial support (maintenance) of one spouse by the other after the breakdown of a marriage or a de facto relationship.
Are Binding Financial Agreements legally binding?
For a financial agreement to be legally binding, both parties must have:
- Signed the agreement, and
- Received independent legal advice as to the advantages and disadvantages before signing.
What are the benefits of a BFA?
Binding Financial Agreements can provide certainty and peace of mind to couples in the event that their relationship breaks down.
Individual ownership of assets can be protected, such as any ownership of assets acquired before or during the relationship, like an inheritance.
For an initial outlay, they can save the costs of litigation after separation.
What are the downsides to a Binding Financial Agreement?
A court can declare the agreement invalid and set it aside. Situations where this might occur, are:
- Where one party to the agreement has acted in a fraudulent or unconscionable manner.
- Since making the agreement there has been a material change in circumstances relating to the care, welfare and development of a child and, as a result of the change, the child or, if the applicant has caring responsibility for the child, the applicant, will suffer hardship.
- Where the agreement is void or unenforceable.
What are the steps to making my Binding Financial Agreement?
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