When you are considering getting married, it can be difficult to consider or imagine what will happen if your relationship breaks down. However, statistically one in three marriages do end in divorce so it is highly recommended that a pre-nuptial agreement is considered to protect you and prevent disputes, in the difficult scenario created if you do end up separating.
A Binding Financial Agreement (such as a pre-nuptial agreement) specifies how your property and finances will be divided in the case of separation and divorce.
These Binding Financial Agreements are not just for those planning to marry, they can also be entered into by de facto and same-sex couples. They can be entered into before, during and after a relationship breakdown.
A well drafted agreement is a useful legal document and can protect your wealth and assets, and provide peace of mind to protect you in the event of separation.
Did you know?
There are many names for Binding Financial Agreements or BFAs, including;
- Pre-nuptial Agreements (commonly known as pre-nups),
- Post-nuptial Agreements (post-nups); and
- Cohabitation Agreements.
How does a binding financial agreement work?
A couple agrees in advance on an acceptable division of assets. If you decide to separate, the agreement can reduce the financial stress and allow you to amicably separate without the need for costly and stressful court action.
When do I need to get a binding financial agreement done?
A binding financial agreement should be done before your marriage or at any point during the relationship. You can also agree to one after separation.
How binding is the agreement if taken to Court?
The short answer is that yes, it is binding if it has been set up correctly.
Ensure that you obtain legal advice to make sure all requirements are made to ensure that they are in fact binding.
How often should we review our Binding Financial Agreement?
We recommend that they are reviewed every two years, and certainly after any significant life events such as the birth of a child.
I do not want to go to Court. Is there another way I can finalise my property matters?
Absolutely! The Family Law Act 1975 allows parties in a marriage or de facto relationship to enter into a financial agreement to manage their finances during the course of their relationship, and to resolve disputes in the case of a relationship breakdown.
The Binding Financial Agreement alters the normal avenue for division of property and other assets deviating from the Federal Circuit and Family Court’s jurisdiction.
Can I enter into a Binding Financial Agreement during marriage?
A Binding Financial Agreement is a document that governs your property interests in the event of a separation during a marriage or de facto relationship. A Binding Financial Agreement can be entered into before (pre-nuptial agreement), during or after a relationship. If made after marriage, the agreement must be made within twelve (12) months of an order of divorce.
A financial agreement is binding on the parties to the agreement if:
- The agreement is in writing and signed by both parties;
- The parties are contemplating entering into a marriage or de facto relationship, are in a de facto relationship or marriage, have separated or divorced;
- It includes a statement from each party to the agreement, before the agreement was signed that the party obtained independent legal advice on their rights and the advantages and disadvantages at the time that the advice was provided to the party of making the agreement;
- Either before or after signing the agreement, each party was provided with a signed statement by a legal practitioner certifying that the advice with respect to the parties rights and advantages and disadvantages in entering the financial agreement was given;
- A copy of the legal practitioner’s statement is given to the other party or a legal practitioner of the other party;
- The agreement has not been terminated and has not been set aside by a court; and
- Includes a separation declaration unless the agreement is signed post-divorce.
Can I prepare my own Binding Financial Agreement?
Your Binding Financial Agreement must be prepared by a lawyer, who will only act for you. Your partner will require their own independent legal advice. The first step is to discus the matter with your partner. If your partner refuses to enter into a Binding Financial Agreement then you cannot proceed further with the process.