A binding financial agreement (BFA) is a private agreement between partners that sets out how property, superannuation and financial matters will be dealt with, either during a relationship, at its end, or both. Done properly, it can offer more certainty than relying on a later court process.
What a BFA can cover
A BFA can deal with how assets and debts are divided, superannuation, and financial support such as spousal maintenance. It can be entered into before a relationship (sometimes referred to informally as a pre-nuptial agreement), during a relationship, or after separation, and applies equally to married and de facto couples.
Requirements for a valid agreement
For a BFA to be enforceable, it must be in writing, signed by both parties, and each party must receive independent legal advice about the advantages and disadvantages of signing before they do so, with their solicitor providing a signed certificate confirming that advice was given. Skipping or rushing this step is one of the most common ways a BFA is later challenged.
BFA or consent orders
A BFA is a private contract, while consent orders are made by the court. Both can achieve a similar practical outcome, but they work differently and suit different situations — we can advise which is more appropriate for you.
When a BFA can be set aside
Courts can set aside a BFA in limited circumstances, including fraud, duress or unconscionable conduct, a material failure to disclose relevant financial information, or where enforcing the agreement would cause significant hardship, particularly to a child. Careful drafting and full, honest disclosure at the outset significantly reduce this risk.
Frequently asked questions
Do both parties need their own lawyer?
Yes. Each party must receive independent legal advice before signing for the agreement to be valid, which means you cannot share the same lawyer.
Are BFAs available to de facto couples, or only married couples?
Both. The same framework applies to married and de facto couples.
Can a BFA be challenged later?
Yes, in limited circumstances such as fraud, duress, non-disclosure or significant hardship, but a properly prepared agreement with full disclosure is much harder to successfully challenge.
What is the difference between a BFA and consent orders?
A BFA is a private contract between the parties. Consent orders are made by the court. Both can achieve similar outcomes, but the process and some of the protections differ.
Can a BFA affect my estate planning?
It can, since it may affect what assets ultimately form part of your estate. It is worth reviewing your will and related documents alongside a new or existing BFA.
A binding financial agreement is one of several ways to give a financial outcome legal force. Family Lawyers Adelaide compares it with consent orders and when each is appropriate.
Contact WPI Lawyers to discuss preparing or reviewing a binding financial agreement.