What is a Binding Financial Agreement?
Binding Financial Agreements (‘BFAs’) are a type of private property arrangement made pursuant to Part VIIIA/Part VIIIAB of the Family Law Act 1975 (Cth)(‘the FLA’). They can be made by parties before, during, and after their de facto relationship or marriage. BFAs are often made prior to entering into a de facto relationship or marriage and these types of BFAs are commonly called “prenuptial agreements” or “prenups”. BFAs can dictate how the parties’ financial assets are to be divided in the event of the breakdown of their de facto relationship or marriage. BFAs can also cover Spousal Maintenance and any other ancillary or incidental matters.
What are the Legal requirements and formalities that a Binding Financial Agreement must comply with?
s90G/s90UJ of the FLA provides a strict list of requirements that must be met for a Financial Agreement to be binding on the parties. These requirements and formalities include:
- The agreement must have been signed by all parties;
- Prior to signing the agreement, each party must have been provided with independent legal advice;
- Each party must have been provided with a signed statement by a legal practitioner stating that the party received independent legal advice;
- Each party must be provided with a copy of the other party’s signed statement certifying the receipt of independent legal advice; and
- The agreement must not have been terminated nor have been set aside by a Court.
When is a Binding Financial Agreement not enforceable?
Firstly, if any of the above formalities and legal requirements are not complied with, the Financial Agreement will not be binding on the parties. However, even if the above formalities and legal requirements are met, a Court can still make an Order setting aside a Financial Agreement. In other words, a Court can still decree that a Financial Agreement is not enforceable.
Section 90K/ section 90UM of the FLA provides an exhaustive list of circumstances in which the Court may satisfy itself that a Financial Agreement should not be enforceable. These circumstances include:
- The agreement was obtained by fraud (including non-disclosure of a material matter);
(it is important to remember that parties to Family Law proceedings have an ongoing obligation to provide full and frank disclosure to the other party)
- The agreement was entered into for the purpose of defeating a creditor of one of the parties;
(for example, if a party enters a Financial Agreement so that they are unable to pay a debt that they owe to someone else)
- The agreement is void, voidable or unenforceable;
- Circumstances have arisen since the agreement was made that make it impracticable for the agreement to be carried out;
- Since the making of the agreement, a material change in circumstances (relating to the care, welfare and development of a child of the marriage) has occurred;
- With respect to the making of the agreement – a party to the agreement engaged in conduct that was unconscionable;
- A payment flag on a superannuation interested covered by the agreement is in operation; and/or
- The agreement covers at least one superannuation interest that is an “unsplittable interest”.
How do I make a Binding Financial Agreement?
It is very important that you receive qualified, independent legal advice. Online templates and ‘one size fits all’ approaches remain largely unsatisfactory and are repeatedly scrutinised by the Courts. What may seem like a cheap fix and a great deal initially can have very expensive consequences. You need an individualised, tailored Binding Financial Agreement that is unique to your (and your partner’s) circumstances. The experienced Family Law experts at JurisBridge Legal will help you every step of the way.
If you would like more information on how the Family Law team at JurisBridge Legal can assist you draft your Binding Financial Agreement, provide advice on your existing Binding Financial Agreement, or assist you with any other family law matters, please do not hesitate to contact us on 02 8355 3737 or fill out the inquiry form here.