A Binding Financial Agreement (BFA) is a ‘pre-nuptial’ agreement that governs your property interests with your de facto partner or husband/ wife. It can be entered into both prior to, during or after your relationship. A financial agreement may include distribution of property, debts and other finance matters, spousal maintenance and other matters.
A common misconception is that a binding financial agreement can only be made before marriage, however this is incorrect. A BFA can be entered into before during or after a relationship. It is not necessary to even be married.
A Binding financial agreement is usually recommended in cases;
- When one party has considerably more assets then the other, this could include an inheritance or business they have come into.
- When stakeholders want to protect their business from marital dispute.
- When one of the parties needs to provide for others and cannot risk being in a financial separation.
The benefit of having a binding financial agreement is that there is no court involvement which saves time and legal costs should the parties separate. It can serve as a safety net for you and your assets. It provides clarity and certainty about who owns what and who is responsible for what.
As per the family law act, each party needs to receive legal advice to ensure that a Binding Financial Agreement can become binding. Your BFA will be prepared for a lawyer that will act solely for you, they are not able to act for your partner as well. If your partner refuses to enter a BFA, then you cannot proceed further.
The process will look similar to this;
- Get independent legal advice. As mentioned above yourself and the other party will need to seek independent legal advice separate to each other. You must get legal advice in order to pursue a BFA.
- You and the other party must provide full and frank financial disclosure. You must disclose all assets, liabilities and resources. You must also disclose income, expenses and debts.
- A lawyer will then help you draft the agreement.
- Once the agreement is drafted and both parties are in agreement, your lawyer will then assist you in singing the document.
As mentioned above, receiving legal advice is a must in matters involving a BFA. Luckily this is something that Joss Legal can help with.