A Binding Financial Agreement (BFA) is a legally enforceable contract between two parties that outlines how assets, liabilities, and financial resources will be divided in the event of a separation. These agreements can be made before, during, or after a relationship and are commonly used by couples who want to protect their financial interests.
What is a Binding Financial Agreement?
A Binding Financial Agreement is a private contract between parties that can cover financial arrangements related to:
- Asset division in the event of separation or divorce.
- Superannuation entitlements and how they are split.
- Spousal maintenance, including financial support after separation.
- Financial responsibilities during the relationship.
BFAs are available to married couples, de facto couples, and same-sex partners under the Family Law Act 1975.
When Can a Binding Financial Agreement Be Made?
A BFA can be entered into at different stages of a relationship, including:
- Before marriage or cohabitation (pre-nuptial agreement) – Protects existing assets and financial expectations. The BFA can also explain how future-acquired property can be dealt with in the event of separation.
- During the relationship – Establishes financial arrangements while the couple is together.
- After separation or divorce – Avoids the need for court proceedings by settling financial matters privately without incurring excessive legal fees.
Why Consider a Binding Financial Agreement?
BFAs provide several benefits, including:
- Financial clarity – A BFA clearly outlines financial rights and obligations during your relationship.
- Asset protection – Ensures that your assets at the time the BFA in made remain protected, especially in cases where one party has significant wealth or inheritance.
- Avoiding court disputes – Reduces the risk of lengthy and costly court proceedings.
- Customisation – Allows couples to set terms that suit their unique financial situation.
Accordingly, if you are looking to engage in property settlement negotiations after you separate, a BFA would prove most beneficial to parties who are/will remain amicable during the separation process.
In many circumstances, parties choose to prepare a BFA before and during their relationship, so that way there is financial clarity and both parties are aware as to their rights and obligations in the event of separation, taking away all the guesswork.
Are Binding Financial Agreements Legally Enforceable?
For a BFA to be legally binding and in compliance with the Family Law Act 1975, it must meet the following criteria:
- Each party must obtain independent legal advice before signing.
- The agreement must be in writing and signed by both parties.
- It must be free from fraud, coercion, or undue influence.
- It must accurately disclose all assets, liabilities, and superannuation as of the date of the BFA.
If a BFA does not meet these requirements, it may be challenged in court and set aside.
Do You Need a Binding Financial Agreement?
While not mandatory, a BFA is beneficial in situations where:
- One partner has significantly more assets than the other.
- A party wants to protect business interests or inherited wealth.
- There are children from previous relationships, and financial arrangements need to be structured.
- A couple prefers to resolve financial matters privately rather than through litigation.
How Digital Age Lawyers Can Assist
Yes, you can file for divorce either jointly or individually.
- A joint application is signed and submitted by both parties.
- An individual application requires you to serve divorce papers on your ex-partner.
- If your ex-partner is overseas, additional legal steps apply.
Given the complexity of legal requirements, seeking advice from experienced divorce lawyers in Sydney can help avoid delays or errors in your application.
How Digital Age Lawyers Can Help
At Digital Age Lawyers, we provide expert legal advice on Binding Financial Agreements to ensure they are fair, legally sound, and enforceable. Our services include:
- Drafting and reviewing BFAs.
- Providing independent legal advice to each party.
- Assisting with negotiations to ensure a fair agreement.
- Challenging agreements if they do not comply with the requirements of the Family Law Act 1975.
A well-drafted Binding Financial Agreement provides peace of mind and financial security. If you’re considering a BFA, our experienced family lawyers in Sydney can help.
Contact Digital Age Lawyers today for professional guidance on securing your financial future.
(02) 8858 3211 | info@digitalagelawyers.com
