A Binding Financial Agreement (BFA) is an agreement between two parties that undergo a range of financial agreements made during a relationship. Binding Financial Agreement is the official name given to it by law and is compliant with the Family Law Act.
In essence, a BFA states how to deal with the division of property, assets, liabilities and/or spousal maintenance, in case the relationship between the parties breaks down. The main purpose of a BFA is to avoid the procedure of going to the court for the division of property, which would otherwise be a right to each party.
By entering into a Binding Financial Agreement, the two parties of the agreement have essentially agreed about how their property and possessions will be divided in a property settlement in case their relationship breaks down.
When to sign a Binding Financial Agreement?
A Binding Financial Agreement doesn’t really have a hard and fast rule for when you can sign it. You can enter a BFA at various points in a relationship.
1. In case of living together (Cohabitation agreement)
2. In the case of planning to live together
3. In case of planning to marry (Pre-Nuptial)
4. When you are already married (Post-Nuptial)
6. In case of separation from the spouse (Separation)
7. When you are divorcing your spouse (Divorce agreement)
In any of these cases, the type of BFA that is needed will be different. It depends on the needs of the particular situation, and as a result, different parts of the Family Act Law apply on each different type of BFAs. A little more about the above scenarios is explained below.
Types of Binding Financial Agreements
The type of Binding Financial Agreement depends on the status of your relationship at the said time.
– Your BFA is a “Cohabitation Agreement” in case you are living together with your partner as a de-facto couple (Section 90UC).
– The “Cohabitation Agreement” is also valid in case you plan to live together with your partner as a de-facto couple but are not yet living together. (Section 90UB)
– If you are planning to marry your partner, you will enter a “Prenuptial Agreement”.
– Partners who are already married and plan to stay married or separate, your BFA is going to be a “Post Nuptial Agreement”.
– In case you are separated from your partner, the type of Binding Financial Agreement you’d have to enter is a “Separation Agreement”. The type of agreement, however, differs on the basis of whether you were a de-facto couple before separation or if you were a married couple.
– A couple that has been divorced and has to settle on the property and other financial assets in a Binding Financial Agreement will have to enter a “Divorce Agreement”.
If you are unsure about what kind of Binding Financial Agreement you will have to enter in a particular situation, Family Lawyers can help you sort that situation out. Platinum Family Lawyers Sydney can provide the assistance you require during any of the above (or other) cases when you wish to enter in a BFA.
When is a Financial Agreement considered as “Binding”?
According to the requirements mentioned in the Family Law Act, a Binding Financial Agreement is binding under the following conditions:
1. The agreement has been signed by all parties involved.
2. Before both the parties sign the agreement, they have to be provided with an independent legal advice who advise on the legal implications of the agreement. The legal advice should also include the advantages and disadvantages to the respective party, at the time the agreement was being signed.
3. Each party is then given a certificate of independent legal advice by their respective lawyer, confirming that the party received independent advice on what the effects of the agreement would be for them.
4. Finally, the agreement has to be valid and not been set aside or terminated by the court.
If all of the above requirements are met, only then is a BFA actually binding. Platinum Lawyers have family law practitioners that can help you set up a BFA by meeting all the requirements and making sure that parties involved understand them well.
What are the advantages of having a Binding Financial Agreement?
Entering a Binding Financial Agreement has many advantages for both you and your partner. Some of these advantages are listed below.
1. If you’ve already been through a separation or divorce before, a Binding Financial Agreement can offer reassurance and offer security in terms of finances.
2. Entering a financial agreement at a good point in your relationship means that your decisions regarding your finances will be more beneficial and most likely to be reasonable for both parties.
3. A Binding Financial Agreement will help you decide about the fair division of financial assets in case the relationship fails.
4. After separation, both parties might have a lot of differences. If they were already in a Binding Financial Agreement, this would mean that they can avoid a lot of arguments and problems when it comes to the division of assets, which could impact the entire family too.
5. Being in a Binding Financial Agreement is kind of like having insurance, in case your relationship with your partner breaks down. While we hope you may never need one, it is advisable to be in a legal agreement that helps you avoid any such arguments.
Platinum Lawyers as a strong legal team, can assist you regardless of your current situation. Our family lawyers in Sydney can help you draft and enter a Binding Financial Agreement. We will thoroughly explain it to you and take you forward step-by-step so you are updated with pthe rocess at all times and sure of the fact that your requirements are met when entering the said Financial Agreement. For more information and queries, call us at (02) 8084 2764.