Binding Financial Agreements
Shan Lawyers is here to assist you with all your binding financial agreements and also to make the process as efficient and smooth as possible to minimise and reduce any confusion or stress that can often arise from such situations when not done well. That is why you need an expert binding financial arrangement lawyer who is competent in such matters. Shan Lawyers have both the experience and expertise to help you with a binding financial agreement.
Binding Financial Agreement: What You Need To Know
A Binding Financial Agreement (BFA) is a legally enforceable agreement between parties, commonly used in family law circumstances. It details the distribution of assets and financial resources in the event of a relationship breakdown, such as separation or divorce. BFAs can address various financial matters, including property division, spousal or de facto maintenance, and superannuation.
1. What is a Financial Agreement?
A Financial Agreement is a contract between two or more parties made under the provisions of the Family Law Act. Commonly, the agreement is to be entered between the married couple or de facto partners, including same sex partners. The Financial Agreement, if prepared and entered into properly, can be a way to ‘contract out’ of court proceedings. Working with a qualified binding financial agreement lawyer ensures your agreement complies with all legal safeguards.
2. When are financial agreements binding?
For a Financial Agreement to be legally binding, it must fulfil specific technical requirements. These include the following:
(a) The Agreement must be in writing and signed by both parties.
(b) Before signing the agreement, each party must have received independent legal advice as to its effects on their rights and the advantages and disadvantages of the terms of the agreement.
(c) Each party must receive a Statement of Legal Advice from their lawyer.
(d) A copy of the lawyer’s Statement is given to each party or their lawyer.
(e) The Agreement has not been terminated and has not been set aside by the court.
The Financial Agreements are very complex. If you want to enter into a Financial Agreement, contact a trusted binding financial agreement lawyer at Shan Lawyers.
3. When can you enter into a financial agreement?
The agreement can be created at various stages of a relationship, and different provisions address each stage. For instance:
– If the agreement is made before marriage (also referred to as a “pre-nup”), it should be prepared under section 90B of the Family Law Act.
– If the agreement is made during the marriage or after separation, it should be prepared under section 90C of the Family Law Act.
– If the agreement is made after divorce, it should be prepared under section 90D of the Family Law Act.
Note – You can also create a superannuation agreement separately or include it with the above agreements.
4. When can you enter into a financial agreement?
Some of the grounds for setting aside a Financial Agreement are as follows:
(a) The agreement was obtained by fraud, including non-disclosure of a material matter. For instance, if one spouse intentionally withholds full and honest financial disclosure with the aim of dissipating assets from the asset pool in order to prevent the other spouse from receiving their proper entitlement in property division.
(b) Entering into the agreement for the purpose of defrauding or defeating a creditor or reckless disregard for the interest of a creditor.
(c) Defrauding or defeating another person.
(d) The agreement is void, voidable or unenforceable.
(e) In the circumstances that have arisen since the agreement was made, it is impracticable for the agreement or a part of the agreement to be carried out.
(f) Since the making of the agreement, a material change in circumstances has occurred, such as a significant shift in spousal or de facto maintenance obligations or unforeseen financial hardship.
If you would like more information about financial agreements or need assistance in drafting one, please feel free to contact us or schedule an appointment with our binding financial arrangement lawyer, Thirumalai (Shelvi).
Frequently Asked Questions:
A Binding Financial Agreement must comply with strict requirements under the Family Law Act 1975 (Cth).
Generally, the agreement must be:
- In writing
- Signed by both parties
- Supported by independent legal advice for each party before signing
- Accompanied by signed statements from each party’s lawyer confirming that advice was provided
If these requirements are not properly met, the agreement may not be binding or enforceable.
Yes. Although Binding Financial Agreements are intended to provide certainty, they can be challenged in specific circumstances.
A Court may set aside an agreement where there has been:
- Non-disclosure of significant financial information
- Fraud or misrepresentation
- Undue influence, duress or unconscionable conduct
- A material change in circumstances relating to the care of a child
- Impracticability in carrying out the agreement
- Serious defects in the agreement or the legal advice process
Careful drafting, full disclosure and proper independent legal advice are essential.
A Binding Financial Agreement does not automatically change if circumstances later become different.
Events such as having children, changes in income, illness, business changes or financial hardship may affect whether the agreement remains practical. In limited circumstances, a significant change may provide grounds to review or challenge the agreement.
Yes. A Binding Financial Agreement can deal with current and future assets, including inheritances, anticipated wealth, business interests, trusts and future property acquisitions.
The drafting must be clear, specific and tailored to the parties’ circumstances to reduce the risk of future disputes.
Understanding the agreement is critical. Each party must receive independent legal advice about the effect of the agreement and the advantages and disadvantages of entering into it.
If there are concerns that a party did not understand the agreement, was pressured, or did not receive adequate advice, the agreement may be vulnerable to challenge.
Yes. A Binding Financial Agreement can allow parties to resolve financial matters privately without applying to the Court.
However, it must be properly prepared and legally compliant. If the agreement is poorly drafted or the required legal process is not followed, disputes may still arise later.
Generic templates can create significant legal risk.
Binding Financial Agreements require careful consideration of each party’s assets, liabilities, income, business interests, superannuation, future financial expectations and personal circumstances. A template may fail to address key issues, resulting in uncertainty or enforceability problems.
Both can formalise financial arrangements, but they operate differently.
Consent Orders are filed with the Federal Circuit and Family Court of Australia and must be approved by the Court as just and equitable.
Binding Financial Agreements are private contracts between the parties. They are not reviewed by the Court for fairness when signed, which makes independent legal advice and careful drafting particularly important.
Legal advice should be obtained before signing or negotiating any Binding Financial Agreement, particularly where there are significant assets, business interests, inheritances, trusts, superannuation or future financial considerations.
An experienced family lawyer in Melbourne can advise whether a Binding Financial Agreement is appropriate and ensure it is structured to protect your long-term interests.