When a relationship ends, whether through divorce or the breakdown of a de facto relationship, the division of assets and financial support often becomes one of the most significant challenges. For many, Binding Financial Agreements (BFAs) are a crucial tool in resolving these matters outside of the courtroom.
But what exactly are BFAs, how do they work, and why are they so valuable? This article will explore these questions, including their suitability, how they compare to consent orders, and why seeking legal advice is essential.
Binding Financial Agreements (BFAs) in Family Law
A Binding Financial Agreement (BFA) is a legally binding document that outlines how a couple will divide their assets, liabilities, and financial resources after the breakdown of a relationship, whether the relationship is a marriage or a de facto relationship. This agreement can address property, spousal maintenance, and even children’s care arrangements, as long as the terms are fair and enforceable under the Family Law Act.
A key feature of a BFA is that it avoids the need for court proceedings. Instead, it provides a more private, agreed-upon solution between parties, overseen by their lawyers. However, the agreement must meet certain conditions set by the Family Law Act to be valid and enforceable.
Who Are BFAs Suitable For?
BFAs are suitable for anyone looking to formalise financial arrangements without going to court. Specifically, they are beneficial for:
- Married couples or de facto partners looking to protect their assets before or after a relationship breakdown.
- Couples with significant assets who want to ensure that their financial arrangements are clearly outlined.
- Individuals seeking a legally binding agreement that may prevent lengthy and costly court proceedings.
BFAs are ideal for those who wish to avoid the stress of contentious negotiations or public court orders. They allow couples to settle financial disputes privately, providing peace of mind and clarity.
Furthermore, BFAs can be beneficial for individuals who are concerned about future financial support or protecting certain assets, like inheritances or family businesses, in the event of a relationship breakdown.
What Are the Different Stages a BFA Can Be Taken Out?
BFAs can be implemented at several stages during a relationship or following its breakdown. Here are the different stages at which a BFA can be taken out:
- Before the Relationship Starts
A pre-nuptial or pre-de facto agreement can be made before entering a marriage or de facto relationship. This outlines the division of assets and liabilities in the event of a future relationship breakdown. It’s a precautionary measure that can protect both parties’ financial interests. - During the Relationship
Couples can enter into a BFA during their relationship to protect their finances. This is especially useful if one partner’s financial situation changes significantly, or if they acquire new assets such as a business, property, or investment. - After Separation
If the relationship has ended, BFAs can still be entered into, provided both parties agree. This is the most common stage at which BFAs are used, as they allow couples to resolve financial matters swiftly and without the need for court proceedings.
How Do They Stack Up Against Consent Orders?
Both Binding Financial Agreements (BFAs) and consent orders are designed to resolve financial disputes outside of the family court. However, they differ in several important ways:
Legally Binding Status
Both BFAs and consent orders are legally binding agreements, but BFAs offer more flexibility and privacy. Once signed, BFAs do not require court approval (although they must comply with legal requirements), whereas consent orders must be submitted to the court for approval. Once approved, consent orders become court orders, which means they are enforceable by the Federal Circuit and Family Court of Australia.
Flexibility
BFAs allow for more negotiation and flexibility between the parties before and after the relationship breakdown. Consent orders, on the other hand, are typically used once a couple has already agreed to a settlement and only needs the Family Court’s approval to make it official.
Cost & Time
Generally, consent orders are faster and cheaper to finalise than BFAS since they only require court approval. A BFA may require more legal preparation and negotiation, especially when complex assets are involved.
However, both options have their merits, and the choice between a BFA and consent orders largely depends on the couple’s individual circumstances. Seeking legal advice from family lawyers is essential to ensure that the chosen approach is the most effective for the couple’s situation.
How Does Planning In Advance Help Couples?
Planning in advance is one of the key benefits of entering into a Binding Financial Agreement. Whether it’s a pre-nuptial or pre-de facto agreement, having a financial plan in place before the relationship ends can help couples avoid future conflict.
For example, a pre-nuptial agreement can outline financial support and asset division in the event of a divorce order or relationship breakdown. This can prevent costly disputes in the future and provide clear guidelines on how assets, such as bank statements, superannuation, and property, will be divided.
By planning in advance, couples can address potential concerns about financial resources, business assets, or children’s care without the added pressure of a relationship breakdown. This proactive approach can also avoid the emotional and financial costs that often come with court proceedings.
Are the Costs Worth The Benefits?
One of the most important considerations when deciding whether to enter into a Binding Financial Agreement is the associated costs. While legal fees are involved in drafting and finalising a BFA, they are often far lower than the costs of court proceedings.
Additionally, a BFA can help couples avoid lengthy and expensive disputes, saving significant legal costs in the long term. With a legally binding agreement, couples have greater certainty about how their assets will be divided, reducing the chances of conflict.
For many, the peace of mind and financial protection offered by a Binding Financial Agreement are well worth the investment. Consulting family lawyers that specialise in binding finacial agreements ensures that the agreement is drafted correctly, enforceable, and tailored to the couple’s specific needs.
What Steps Are Essential For A BFA To Be Valid?
To ensure a Binding Financial Agreement is valid, specific steps and conditions must be met. These include:
Full Disclosure
Both parties must provide financial disclosure, including bank statements, assets, liabilities, and income. Failure to disclose all financial information can render the BFA invalid.
Independent Legal Advice
Before signing the agreement, each party must seek legal advice from a family lawyer. This ensures both parties understand the terms and the legal implications of the agreement.
Written Agreement
The BFA must be in writing and signed by both parties. If it concerns a divorce or de facto separation, a lawyer must witness it to ensure its enforceability.
No Duress or Coercion
The agreement must be entered into voluntarily, without duress, coercion, or undue influence from either party.
A Powerful Tool To Help Couples Manage Their Financial Future
In family law, Binding Financial Agreements (BFAs) are powerful tools for couples looking to protect their financial interests, whether before, during, or after a relationship. By seeking legal advice, couples can ensure they make informed decisions that suit their unique situation. Whether you choose a BFA or consent orders, understanding the implications, costs, and benefits is essential for a fair and legally binding resolution of your financial matters.
If you’re considering a BFA or need assistance working out financial arrangements post-separation, we can advise you on the most appropriate manner in which to formalise the agreement, depending on your circumstances. Don’t leave your future financial security to chance, take control and plan ahead today.
Talk To Our Queensland Family Lawyers Today To See If A Binding Financial Agreement Is Right For You.
Once determined whether a Binding Financial Agreement best protects your interests, we are able to prepare the documentation on your behalf. In the alternative, should your former spouse’s lawyer have already prepared such documentation, we are able to assist in providing advice in relation to the meaning and effect of the document and of any changes that may be required.
Because a binding financial agreement is a private agreement, it is important to seek professional legal advice. A binding financial agreement can be made before, during, or after a relationship to address how all or part of the property is dealt with.
Contact Us For 15 Minutes of Free Legal Advice
Binding financial agreements are complicated and require expert legal advice. This is one of our areas of expertise, and we can assist you through the process. If you have any queries, call our Gold Coast or Logan office to request a free, no-obligation 15-minute telephone consultation with one of Our Team members.
Our lawyers are approachable and highly experienced in family law. We understand the needs and complexities of modern families and always strive to resolve matters amicably. We ensure our clients’ legal rights are upheld and that the welfare and best interests of any children concerned are a priority.
Frequently Asked Questions
1. What is a Binding Financial Agreement in Queensland?
A Binding Financial Agreement (BFA) is a written agreement which reflects the agreement reached between parties as to property settlement and or spousal maintenance matters, is signed by the parties and witnessed by a Justice of the Peace or Solicitor, but unlike Consent Orders, it is a compulsory requirement for each party to obtain independent legal advice prior to signing the BFA, which is evidenced by a certificate attached to the Agreement. There is no need for a BFA to be filed in Court, as the effect of the Agreement is that you are contracting out of the Court process.
2. Can a Binding Financial Agreement Be Overturned?
A Binding Financial Agreement (BFA) can be overturned in some circumstances. The parties to the BFA may overturn it themselves by entering into a Termination Agreement. A BFA may be overturned following an application being made to the Court in circumstances, including:
- If the BFA was obtained by fraud, including non-disclosure of a material matter;
- If circumstances that have arisen since the BFA was made make it impracticable for the Agreement or part of the Agreement to be carried out;
- Since the making of the BFA, a material change in circumstance has occurred, being circumstances relating to the care, welfare and development of a child of the marriage, and as a result of the change, a party to the Agreement will suffer hardship if the Court does not set the Agreement aside;
- The BFA relates to a superannuation interest which is an unsplittable interest.
- If the following contractual principles apply:
(a) The Agreement is void, voidable or unenforceable;
(b) In respect of the making of a BFA, a party to the Agreement engaged in conduct that was in all the circumstances unconscionable.
3. How Much Does a Binding Financial Agreement in Queensland Cost?
The costs of preparing a Binding Financial Agreement (BFA) depend upon the complexity of your circumstances. One party usually bears the costs of having the BFA prepared, in addition to the legal fees associated with obtaining the compulsory legal advice. That leaves the other party to only be responsible for the legal fees associated with receiving their own compulsory legal advice.
Get Professional Legal Advice from Advanced Family Law
If you consider that a Binding Financial Agreement in Queensland may be suitable in your matter, seek help from an expert. Advance Family Law is a firm you can depend on when it comes to legal solutions.