BINDING FINANCIAL AGREEMENT

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what is a binding financail agreement

A Binding Financial Agreement (BFA) is a contract between couples that sets out how their money and property would be divided if their relationship were to end. Think of it like a safety plan that helps protect each person’s financial interests and can cover everything from savings and properties to debts and future earnings.

This agreement can be made before a couple gets married (often called a prenuptial agreement), during the marriage, or after a de facto or married couple separate. The idea is to agree on these matters while things are amicable, rather than going through potentially lengthy and costly disputes.

In simpler terms, it’s a way for couples to clearly outline who owns what and how everything should be split up, should they decide to part ways, all without having to fight it out in court. This can offer peace of mind and save a lot of headaches and heartaches later on.

Legal Requirements

For a Binding Financial Agreement (BFA) to be considered legally valid, it must meet several strict criteria:

Voluntary Agreement: Both parties must willingly agree to the terms of the BFA without any pressure, force, or undue influence from the other party or outside entities.

Full Disclosure: Each party is required to provide a complete and honest disclosure of their financial circumstances. This transparency ensures that both parties make informed decisions about the agreement.

Independent Legal Advice: It is mandatory for each party to seek and receive independent legal advice. A qualified lawyer must explain the advantages and disadvantages, as well as the effects of the agreement and ensure you understand your obligations.

Written Agreement: The agreement must be formally documented in writing and signed by both parties involved. The agreement much include a certificate of independent legal advice as well as a separation declaration.

These requirements are put in place to protect both parties and ensure that the agreement is fair and just, preventing future legal disputes.

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Frequently Asked Questions

01

Can a BFA be set aside by a court?

Yes, however, it is important to remember that once a BFA is entered into correctly, it will be considered binding, and having it set aside by a court  (without the other party’s consent) is a difficult and expensive process. 

02

Does a BFA continue to be valid after Marriage?

A BFA made between de facto partners will cease to be binding if it is not made in contemplation of marriage, and the parties marry. You should advise your lawyer if you intend to get married so that the agreement can property drafted persist after your marriage.

03

Do I need to disclose everything in a BFA?

Yes, full and frank disclosure is a key requirement that must be satisfied in order for the agreement to be legal and binding. The parties must enter into the agreement of their own free will and be fully informed.

04

Can I prepare my own BFA?

No. A BFA is a complex legal document that should be prepared by a lawyer to ensure it complies with the legal requirements for it to be an enforceable agreement. In addition, each party will still need to engage a lawyer to receive independent legal advice on the terms of the agreement.

05

When can I enter a BFA?

A BFA can be entered into either before, during or after a marriage or de facto relationship. Different sections of the Family Law Act 1975 apply to each scenario, and you should consult your solicitor for advice on the various circumstances.

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