Binding Financial Agreement
A Binding Financial Agreement (commonly known as 'BFA') is a written contract between two individuals who are either married or in a de facto relationship. It contains a reached agreement between two parties in relation to their finances, division of assets and financial resources and other issues such as spousal maintenance and property settlement in the event of a relationship breakdown.
When can a Binding Financial Agreement be made?
A Binding Financial Agreement can be made anytime before, during or after marriage, or a relationship breakdown.
What are the requirements of a Binding Financial Agreement?
For a Binding Financial Agreement to be binding, there are several conditions that needs to be met:
- The Financial Agreement is signed by both parties;
- Each party must be provided with independent legal advice prior to signing the Financial Agreement;
- Each party must be given with a signed statement by his or her legal representative stating that the advice was provided to the party, either before or after signing the agreement;
- A copy of the statement signed by the legal representative must be provided to the other party; and
- The Financial Agreement has not been set aside by the court.
In the event that paragraph (b), (c) or (d) above have not been satisfied, the Financial Agreement may still be found to be binding if the court is satisfied that it would be unjust and inequitable if the Financial Agreement was not binding on the parties.
When will a Binding Financial Agreement be ineffective?
However, there are a number of grounds on which a Binding Financial Agreement can be made ineffective. These include:
- Void or unforceable;
- Impractible to be carried out (all or some part of the Binding Financial Agreement);
- There has been a material change in circumstances since the making of the Financial Agreement; and
- If a party engaged in unconscionable conduct in making a Binding Financial Agreement.
Advantages of a Binding Financial Agreement
- It does not require court proceedings and thus, you generally reduce the financial and emotional cost of legal proceedings;
- It provides liberty to both parties to make their own decisions and decide what to include in the agreement;
- The agreement may include provisions relating to child maintenance and thus, your continuing relationship as parents is likely to work better;
- The agreement may include the division of assets and allows you to receive funds/property now, rather than waiting for court proceedings;
- The matters between you and your spouse are settled and you can both move on with your life;
- It diminishes eventual stress, dispute and hostility in the relationship;
- It can reduce uncertainty of the future and provides assurance within the relationship;
- There is less time required in finalising the matter; and
- Stamp duty exemptions apply.
Disadvantages of a Binding Financial Agreement
- You may be receiving less than what you are entitled to;
- Your circumstances may change and you may have to revisit the matter;
- There may be other assets not disclosed by the other party, which may entitle you to more entitlements;
- The values disclosed may not be accurate;
- It can be costly to negotiate, prepare and have it signed, on the basis that it may involve complicated situations such as: children, separation, a party remarrying or a death of a party.
If you are considering entering into a Binding Financial Agreement, contact Sydney Lawyers and Associates Pty Ltd for legal advice and assistance. We will assist you with preparing the Binding Financial Agreement and provide you with the necessary legal advice.These articles are intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.