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Binding Financial Agreements

Binding Financial Agreement

Part of any good plan is a contingency and and exit strategy. Unfortunately not every relationship lasts as long as we might like, and if you have shared assets things can get messy.

A Binding Financial Agreement (BFA), or pre-nuptial agreement, is a document or series of documents that govern your property interests in the event of a separation during a marriage or a de facto relationship. The Family Law Act 1975 (Cth) allows parties in a marriage or de facto relationship to enter into a BFA to manage their finances during the course of their relationship, and to resolve disputes in the case of a relationship breakdown. A BFA can be entered into before, during or after a relationship. If made after marriage, the document must be made within twelve months of an order of divorce.

Requirements to be Binding

The Family Law Act 1975 (Cth) has a number of requirements that must be met before financial agreement becomes binding. This includes that each party has received independent legal advice about specific matters and that a certificate as to what advice was given is annexed to the Agreement and is signed by each party’s solicitor.

  • A financial agreement is binding on the parties to the agreement if, and only if:

    The agreement is in writing and signed by both parties; and
  • The parties are contemplating entering a marriage or de facto relationship, are in a de facto relationship or marriage, have separated or divorced; and
  • It includes a statement from each party to the agreement, before the agreement was signed that the party obtained independent legal advice on their rights and the advantages and disadvantages at the time that the advice was provided to the party of making the agreement; and
  • Either before or after signing the agreement, each party was provided with a signed statement by a legal practitioner certifying that the advice with respect to the parties rights and advantages and disadvantages in entering the financial agreement was given; and
  • A copy of the legal practitioner’s statement is given to the other party or a legal practitioner of the other party; and
  • The agreement has not been terminated and has not been set aside by a court; and
  • Includes a separation declaration unless the agreement is signed post-divorce.

Frequently Asked Questions

If your relationship ends, and you do not have a legal BFA, then it is up to you and your former partner to negotiate a property settlement. If you cannot agree an application needs to be made to the Family Court to make a determination.

The document must be prepared by a lawyer, who is acting only for you.

Binding Financial Agreements are also known as pre-nuptial agreements, post-nuptial agreements, cohabitation agreements, separation agreements and divorce agreements.

The circumstances under which a BFA may be set aside set by a Court include:

  • a party to the agreement entered into the BFA for the purpose of defrauding or defeating a creditor;
  • where the agreement has been obtained by fraudulent means i.e. by failing to disclose an asset;
  • a party’s conduct in the making of the BFA was, in all the circumstances, unconscionable;
  • the agreement is void or unenforceable because it does not comply with the legislative requirements set out in section 90G or section 90UJ of the Family Law Act 1975 (Cth);
  • circumstances have changed since the agreement was made which make it impossible or impracticable to continue;
  • since the making of the agreement, a material change in circumstances has occurred relating to the care, welfare and development of a child of the relationship and, as a result of the change, a party to the agreement will suffer hardship.

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