What is a Binding Financial Agreement?

A Binding Financial agreement (BFA) is a written agreement, which complies with Part VIIIA of the Family Law Act 1975 (“the act”). A Binding Financial agreement can be entered into by a married couple or by two people who intend to be married in the future (in the latter case the agreement is often referred to as a “pre nuptial agreement” or “pre nup”).

Whilst the main effect of the agreements is to prevent either party making an application to the Family Court for the division of property, The aim of introducing Binding financial Agreements is to encourage couples to agree about how their matrimonial property should be distributed in the event of, or following, separation'. This can be very reassuring if you have already been through the breakdown of a marriage before.

Binding Financial Agreements follow the lifecycle of a relationship and can be entered into at four separate times:

(i) before marriage (Pre Nuptial pursuant to section 90B);

(ii) during marriage (post Nuptial Pursuant to section 90C);

(iii) during marriage in contemplation of separation (separation pursuant to section 90C);and

(iv) after separation (section 90d).

The popularity of Binding Financial Agreements shows men and women are taking more financial and legal precautions against a relationship breakdown. Most see it as a form of insurance -- a legally binding safety net which they hope to never need.

Many people marrying the second time around, with assets or kids from a first marriage, like the security of a pre-nuptial. If you didn’t get round to making one, or if circumstances have changed, couples already married can also make a post nuptial financial agreement. You may even be divorced and find yourself in a situation where you need the certainty of outcome that a Binding Financial Agreement provides.

Your BFA can deal with children, maintenance, property of the parties, among other things or you may choose to deal with only one of these issues.

Leon is the son of a moderately wealthy farmer. In fact the family farm has not changed hands in over 100 years and the management and ownership has just passed to Leon . Leon and Andria met 6 months ago and have decided to get married. Even though both parties are devoted to one another, Leon is worried that should the marriage fail Andria could make a claim for this valuable family asset. The couple have agreed in principle that Leon ’s family farm should be kept out of any future dispute and shall remain in his ownership and control.

Leon can protect the asset by pre determining how the farm should be dealt with by entering into A Binding Financial Agreement made under section 90B of the Family Law Act. This type of agreement is commonly known as a Pre nuptual agreement. Entering into a BFA now will also remove any doubt and uncertainty that often lead to arguments, and in doing so can actually strengthen the relationship.

Remember BFA are intended to be used at any time during the life cycle of a relationship.

Tracy is a bright young business woman who has worked hard to build her own business and buy her own home. Love being as it is has swept her off her feet and after a short romance upon a cruise ship she has married Clive, a handsome young truck driver with a sharp wit and a 1972 Landrover. Now even tough the newlyweds are very much in love and they intend living happily everafter, Tracy is concerned she may have rushed into the relationship without considering any of the financial ramifications of such a quick decision. Tracy and Clive have agreed that should they not live happily ever after then Clive will not make any claim for the house and business assets which Tracy has worked so hard to aquire. Tracey wants nothing to do with the Landrover.

To finalise this arrangement Tracy and Clive should make a post nuptial BFA under section 90C of the FLA. This will effectively isolating all of Tracy ’s and Clive’s pre marital assets from their post marital assets paving the way for a happy future together without suspicion. This type of agreement is sometimes known as a post nuptual agreement.

Is a Binding Financial Agreements going to stop future court action?

The Agreement will lessen the chance of needing to go to court but you can never eliminate access to the Court, regardless of how your agreement is worded. If one party hides an important fact the other party can always go back to court and it is up to the court whether it intervenes and overturns the agreement.

One might think that a binding financial agreement needs to be fair to both parties but this is not necessarily the case. Should your agreement come before a court, the courts will not dismiss or set an agreement aside simply because it favours one party over the other. This is because section 90G of the family Law Act requires both parties to receive independent legal advice before they sign the agreement. This process ensures that both parties understand the advantages and disadvantages, financially or otherwise, of signing the agreement and it stops either party going to court with the excuse that they didn't know what they were signing at the time.

By being able to sit down with your partner to work out what your agreement needs to achieve, before you both run of to the lawyers, will save you considerable time, money and anxiety.

Our kit provides all the information you need to drafted a professional agreement before your first meeting This will not only save your legal advisers time as well and that means your costs should be reduced significantly

What ever the stage of your relationship, www.financialagreements.com.au can provide a BFA template with easy to follow instructions that will save you time and money.

Pre De Facto / Cohabitation Agreement Available for Immediate Download Only $129.95 More Information Click Here
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Cohabitation Agreement Available for Immediate Download Only $129.95 More Information Click Here
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Pre Nuptial Agreement Available for Immediate Download Only $129.95 More Information Click Here
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Post Nuptial Agreement Available for Immediate Download Only $129.95 More Information Click Here
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For information on de facto or cohabitation type relationships go HERE.