At Joss Legal, we are often asked what ‘prenuptial agreements’ are. Prenuptial agreements, or binding financial agreements (‘BFA’) as they are known in Australia, are written agreements between two parties to determine how assets will be divided if the relationship were to break down.
Reasons for a BFA
Usually, parties seek to protect assets accumulated before the relationship or marriage from claims made by the other spouse. Other reasons for a BFA include the following:
- Receiving a substantial inheritance at some point in the relationship or marriage;
- Protecting a particular asset;
- Providing for children in the relationship or marriage;
- Coordinate and support estate plans to ensure property passes to other family members; or
- Certainty of dispute resolution if the relationship or marriage were to break down.
Who can enter into a BFA?
BFAS can be entered into before, during or after the de-facto relationship/marriage. This is also available to same-sex couples.
What does a Binding Financial Agreement cover?
BFAs can cover financial assets such as money in bank accounts, superannuation, stocks, and investments. A key feature added to a BFA is the family home. BFAs can also cover financial support for one spouse by the other and any vehicles in the relationship.
BFAs do not cover parenting or child support matters. Parties can enter into a separate binding child support agreement or Consent Orders.
What is the process of getting a Binding Financial Agreement?
Before finalising a BFA, both parties should discuss what assets to split and what assets to keep. The parties should freely agree to the proposed split without undue influence, fraud, bad conduct or fraud.
Once the BFA’s contents are agreed upon, both parties must obtain independent professional legal advice on the agreement. In most financial settlement matters, parties must meet the just and equitable element as required by the Family Law Act 1975 (or Family Court Act 1997). This is why each party must obtain legal advice and written advice from their lawyer on the BFA as this rule does not apply to BFA’s. The interests of the parties are in conflict therefore, a single lawyer is not able to advise each party accordingly. This is a requirement to ensure that the BFA meets the legislated requirements enabling the agreement to be valid.
Once drafted, both parties’ lawyers may review and make amendments to ensure that you are protected.
Once agreed upon, the BFA is then signed by both parties. The BFA will then come into effect with both parties obligated to act as set out in the agreement.
Binding Financial Agreements and Family Court
A BFA is a private arrangement between the parties. The Family Court has jurisdiction to make a finding that the agreement does not comply with the law and is invalid. Invalidity can arise from failing to meet the legislative requirements.
Making Amendments or Setting Aside a Binding Financial Agreement
Once finalised, BFAs can only be amended by making a new agreement or terminated by making a written agreement known as a ‘termination agreement’.
A BFA can be set aside by the Family Court on the following grounds:
- Fraud
- This can include non-disclosure at the time when entering the Binding Financial Agreement.
- If a party enters into the agreement for the purpose of defrauding or defeating a creditor;
- Circumstances after the agreement which make it impossible or impracticable for part or the entire agreement to be carried out;
- If a change in circumstances after the agreement relating to the care of child of the relationship, resulting in a party to the agreement suffering hardship;
- If one of the parties acted unconscionably when making the agreement.
Further Advice
We at Joss Legal can assist you with the preparation of a BFA as well as provide you with independent legal advice about the terms in your financial agreement.
Joss Legal prides itself in providing supportive and affordable advice to our clients. If you would like to book in with one of our experienced solicitors for an initial consultation, please contact (08) 6559 7480 or via email at lawyers@josslegal.com.au