A Binding Financial Agreement (BFA) isn’t sexy on paper or in reality – but it might just save you tens of thousands of dollars.
A BFA is better known on the big and smaller screens as a “pre-nup”.
And while it is always an awkward conversation to raise at any time in a relationship, it might get a whole lot more awkward and expensive if things go pear-shaped.
The document is a legal, binding financial agreement between two parties with the intention of avoiding a courtroom and the application of the Family Law Act 1975.
Its purpose is to agree on the division of assets in the event a couple’s relationship breaks down.
It is a relatively painless process and can be made before, during or even after a marriage or de facto relationship has dissolved.
And it can end up saving couples a lot of extra stress, heartache and money by avoiding expensive and protracted court battles.
What assets should be included in a Binding Financial Agreement?
A BFA should include any property or financial assets when the agreement is made including but not limited to:
- Real estate including the place of residence and investment properties
- Mortgage debt and bank or credit card debt
- Vehicles such as cars, motorbikes and scooters
- Joint and separate bank accounts
- Superannuation entitlements
- Any business or part interest or shares in a family business
- Inherited assets from a family trust or discretionary trust
- House contents including furniture
- Any other valuable items
What key information should be included in your Binding Financial Agreement?
To ensure the BFA is watertight and likely to stand up in court against any possible future legal challenge, it needs to include the following key information:
- The full name, address, occupation and date of birth of both parties.
- Brief details about when the relationship began, when you started living together and when you intend to marry.
- A detailed list of all assets of both parties including specifics of bank accounts and their value as well as any company interests.
- A similarly detailed list of all liabilities of both parties.
- Details and values for both parties of any financial resources including superannuation funds, or if either of you are a beneficiary of a discretionary family trust.
- Consider how you wish your various assets, liabilities and financial resources to be treated during the marriage or relationship as well as should the relationship dissolve.
- Consider how the division of your assets would change in the event any children.
Obtain independent legal advice
For the BFA to hold up to any challenge in the Family Court of Australia, it is absolutely imperative that both parties have obtained independent legal advice.
If the agreement is not certified by a different lawyer from each side, it will not stand up in court.
Both parties must then sign the Binding Financial Agreement and have it witnessed by a Justice of the Peace or a lawyer.
Contact us today
Binding Financial Agreements are a good idea as long as both parties are engaged in the process and they are drawn up correctly.
If you think a BFA could be right for you, it’s important to get quality advice about their value as well as some of their traps and pitfalls.
Talking to an experienced family lawyer is essential if you are curious about a BFA and want to ensure it is safe from a future legal challenge.
Nick Boswell has significant experience with Binding Financial Agreements. Get in touch to talk about your needs.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Legal matters referred to on this website are of a general nature only and are based on Nicholas Boswell & Co Lawyers’ interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nick’s Family Law specialises in straight forward divorces, divorces involving separation under the one roof, child support agreements, financial arrangements and reaching agreements through negotiation, mediation, collaborative practice and through the court process.
Contact us now for a no obligations discussion about your needs.