Binding Financial Agreements

What is a Binding Financial Agreement (BFA)?

A Binding Financial Agreement (BFA) sometimes referred to as a ‘pre-nup’ is a legally binding contract made between parties in a de facto relationship, a marriage, or a same-sex relationship in Australia. Its primary purpose is to set out the financial arrangements in the event of a breakdown in the relationship, including property division, spousal maintenance, and other financial matters. Essentially, it allows couples to make their own financial arrangements outside the court system, providing a level of autonomy and control over their financial futures.

Types of Binding Financial Agreements:

In Australia, there are three main types of Binding Financial Agreements:

1. Before Marriage or De Facto Relationship (Prenuptial Agreement): These agreements are made before a marriage or de facto relationship begins and outline how the parties will divide their property and assets if the relationship ends.

2. During Marriage or De Facto Relationship (Postnuptial Agreement): These agreements are made during the marriage or de facto relationship, allowing parties to clarify their financial arrangements at any stage.

3. After Separation or Divorce: Following the breakdown of a relationship, parties can enter into a BFA to formalise their property settlement and financial matters outside of court.

Key Features of a Binding Financial Agreement

  • Binding Nature: As the name suggests, a BFA is legally binding. This means that both parties are bound by the terms and conditions outlined in the agreement.

  • Financial Disclosure: Full financial disclosure is essential. Both parties must provide a comprehensive overview of their assets, liabilities, and financial resources. Failure to do so may render the BFA invalid.

  • Independent Legal Advice: Each party must seek independent legal advice before signing the agreement. This ensures that both parties fully understand their rights and obligations.

  • Certification: A BFA must be in writing and signed by all parties. Each party's lawyer must also sign a certificate confirming that they have provided legal advice.

Advantages of a Binding Financial Agreement

Binding Financial Agreements offer several benefits, including:

  • Certainty: They provide a clear roadmap for financial matters in the event of a relationship breakdown, reducing uncertainty and potential conflicts.

  • Privacy: BFAs allow parties to keep their financial affairs private, as opposed to court proceedings which are generally open to the public.

  • Autonomy: Couples can make their own decisions regarding property and financial matters, rather than relying on a court's judgment.

  • Cost-Effective: Avoiding court proceedings can save both time and money.

How our expert team at Orman Solicitors can help with Binding Financial Agreements.

Binding Financial Agreements are a valuable legal tool that allows individuals in relationships to determine their financial rights and responsibilities. However, it's essential to seek legal advice when considering a BFA to ensure you are protected by the law and it adequately protects your interests.

If you're contemplating a Binding Financial Agreement or have questions contact our experienced family lawyers who can guide you through the process and provide the legal expertise needed to create a fair and legally binding agreement tailored to your unique circumstances.

Do you want more information to help guide you through separation and divorce?

We recommend you read our pages on:

Separation & Divorce Parenting Arrangements Child Support

Spousal Maintenance De facto Relationships Property Settlements