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Property and De Facto Matters

Binding Financial agreements

What is a Binding Financial Agreement?

A Binding Financial Agreement is a term for a financial agreement that can be made under the Family Law Act either before, during or after a defacto relationship or marriage. A Binding Financial Agreement sets out how property will be divided between parties of relationship taking into consideration the assets, liabilities and financial resources. This document allows parties to come to an agreement without needing to go to the Family Courts in order to formalise what they decided to do with their property.

What is a Prenuptial Agreement?

In Australia, a prenuptial agreement is referred to as a Binding Financial Agreement. The Binding Financial Agreement is an agreement entered into before, during or after a marriage or de facto relationship. A BFA is designed to set out the division of property in the event that the relationship breaks down, to the exclusion of the court. The Binding Financial Agreement deals with property, financial resources, spousal maintenance and superannuation matters. The Family Law Act (1975) is the relevant legislation dealing with Binding Financial Agreements for married and de facto couples, including same sex couples.

Legal Requirements

It is important that your Binding Financial Agreement is put together with careful legal advice to ensure that the agreement is not set aside by the court. There are strict legal requirements for making a valid Binding Financial Agreement:

  • Each person must receive independent legal advice before signing the Binding Financial Agreement;
  • Legal advice must be obtained by a lawyer in the Australian jurisdiction;
  • Each person must sign the Binding Financial Agreement voluntarily;
  • The Binding Financial Agreement must be in writing; and
  • The Binding Financial Agreement must contain each person’s complete disclosure.

If both parties have validly executed a Binding Financial Agreement, the agreement will nearly always work.   

Advantages of a Binding Financial Agreement

  1. Time and costs – By entering into a Binding Financial Agreement, you will likely save the time and costs associated with a potential court hearing;
  2. Certainty – A Binding Financial Agreement provides complete certainty on how your assets will be divided upon separation. A Binding Financial Agreement removes any uncertainty which may exist by virtue of the discretionary power of the court;
  3. Finality – By formalising the division of property, each party will not have the ability to make any further claims on assets that may be subsequently acquired; and
  4. Amicable separation – Binding Financial Agreements allow parties to separate more amicably, with no disagreements as to property division.

Advantages of a Binding Financial Agreement

The Binding Financial Agreement cannot be varied but it can be terminated by agreement between the parties. The termination agreement must satisfy the same requirements and formality as those stipulated when entering into the original Binding Financial Agreement.

The court can set aside the Binding Financial Agreement on the following basis:

    • The legal requirements listed above have not been met;
    • The agreement was obtained by fraud (failure to disclose relevant information);
    • The agreement is void, voidable or unenforceable on the basis of mistake, undue influence, duress, unconscionable conduct or uncertainty; and
    • If the parties have a child which wasn’t previously mentioned in the Binding Financial Agreement.

Should I consider a Prenuptial Binding Financial Agreement?

We understand that discussing a Binding Financial Agreement may seem awkward at first, but it is a very useful way to plan how your property will be divided if the worst-case scenario does occur. A Binding Financial Agreement allows you to discuss the matter with your partner in a calm environment with no animosity. If you decide to proceed with a Binding Financial Agreement, we recommend that you seek legal advice as they are complex documents to prepare.

The Next Step

If you would like to discuss property or any other parenting matters, contact us on 8391 8411 to book a free 30-minute consultation with us to discuss what steps you should take next.

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