This article discusses the costs and family law processes associated with drafting, modifying, and terminating a Binding Finacial Agreement (BFA) in Australia, including related expenses.
Your fees will depend on who you choose to work with, the complexity of your matter, and any additional costs incurred in terms of financial advice and valuations.
A Binding Financial Agreement (BFA) is a legal document designed to outline the property division and financial arrangements between parties in the event of a relationship breakdown. It can be used for asset protection purposes, estate planning, or to avoid a property settlement dispute.
Under the Family Law Act 1975, BFAs can function as prenup agreements or postnuptial agreements and are especially valuable in family law matters involving property interests, superannuation interests, and business assets.
Costs of Drafting a Binding Financial Agreement in Australia
1. Legal Fees for Drafting
One of the primary costs of establishing a BFA is the legal fees incurred when hiring a family law solicitor to draft the agreement. Legal fees can vary widely depending on the complexity of the financial arrangements and the solicitor’s experience. One advantage of BFAs is that you won’t need to make a court application or have a court hearing.
- Basic Matters: Legal fees typically range from $1,000 to $3,000 for straightforward cases. This covers standard due diligence and draft agreements without significant complexities related to material changes in assets or income.
- Complex Matters: If the agreement involves complicated assets such as multiple properties, business interests, or significant family wealth, costs can escalate to between $3,000 and $10,000 or more. In these cases, a detailed examination of financial documents, such as bank statements and tax returns, may be required.
2. Independent Legal Advice
However, both parties must receive independent legal advice before signing a BFA to ensure that they understand their rights and obligations. This requirement is crucial for ensuring the agreement’s enforceability.
- Cost Per Lawyer: The cost of independent legal advice to review agreements typically ranges from $500 to $1,500 per person. This investment is essential to protecting both parties’ interests. It’s similar to the costs one would incur for advice for Consent Order applications in the Federal Circuit Court and Family Court of Australia.
3. Financial and Taxation Advice
Depending on the complexity of the BFA, parties may also need financial or taxation advice. This advice can help address tax implications related to property division, business interests, or superannuation arrangements.
- Cost of Financial Advice: Engaging a financial advisor or accountant may cost between $150 and $500 per hour. The total costs for financial advice could range from $1,000 to $3,000, particularly if a thorough analysis of asset valuations or financial implications is necessary.
4. Asset and Superannuation Valuation
If a BFA involves substantial assets or superannuation interests, valuations may be necessary to determine their current worth. This is crucial for ensuring fair property division in the event of a relationship breakdown.
The cost of asset valuations can vary significantly:
- Property Valuation: A residential property typically costs between $300 per property.
- Business Valuation: Ranges from $2,000 to $10,000, depending on the complexity of the business and valuation methods used.
- Superannuation Valuation: Generally costs between $200 and $600, depending on the fund type and asset complexity.
Costs of Altering a Binding Financial Agreement
As life circumstances change, parties may need to alter their BFA. Common reasons for modifications include changes in income, family situations, or significant material changes in assets.
- Alteration Costs: The cost of altering a BFA can be similar to the initial drafting fees, typically ranging from $1,000 to $5,000. Both parties must engage their lawyers to ensure the modifications are legally enforceable.
Costs of Terminating a Binding Financial Agreement
Parties wishing to terminate a BFA must draft a termination agreement. This process also incurs costs and requires both parties to seek independent legal advice again.
- Termination Costs: The costs associated with drafting a termination agreement can range from $800 to $2,500, depending on the complexity of the agreement and the negotiations involved.
Potential Costs Summary
To summarise, here are some estimated figures associated with various aspects of creating, altering, and terminating a Binding Financial Agreement in Australia:
| Cost Item | Estimated Figure |
|---|---|
| Legal Fees for Drafting | $1,000 – $10,000 |
| Independent Legal Advice (per person) | $500 – $1,500 |
| Financial and Taxation Advice | $1,000 – $3,000 |
| Asset Valuation | $200 – $10,000 (varies) |
| Cost to Alter BFA | $1,000 – $5,000 |
Can a Binding Financial Agreement Be Overturned?
While a BFA is intended to provide clarity and security regarding property division and financial arrangements, it can be overturned under certain circumstances. Case law, including significant rulings like Thorne v Kennedy and Black v Black, has established grounds on which a BFA may be challenged. Common reasons include:
- Undue Influence: If one party was coerced into signing the agreement or lacked free will, the BFA may be deemed unenforceable.
- Material Non-Disclosure: If one party fails to disclose significant financial information, the BFA may be overturned.
- Lack of Independent Legal Advice: If either party did not receive proper legal advice before signing, it can challenge the agreement’s validity.
- Material Changes: Significant changes in circumstances, such as changes in income or new financial responsibilities, can prompt a review of the BFA.
In the event of a dispute regarding a BFA, parties may find themselves in court disputes. If a BFA is overturned, property division and maintenance agreements may still be subject to review in the Family Court or Federal Circuit Court.
Some infamous matters in Australia regarding the fairness of BFAs, such as the High Court of Australia case of Thorne v Kennedy [2017] HCA 49, demonstrate that it’s imperative for both parties to receive and understand the advice given by a prenup lawyer.
This matter focused on the marriage of an Australian property developer to Ms Thorne, a European woman. Within days of her wedding, Ms Thorne signed two financial agreements. Many court battles arose from this, and the BFA was overturned in Ms Thorne’s favour due to undue influence and unconscionable conduct.
Conclusion
Creating a Binding Financial Agreement in Australia involves several legal processes that will vary based on the complexity of the financial situation and the need for independent legal and financial advice. While it may seem like a significant upfront investment, a well-drafted BFA can save parties from potential disputes and lengthy court proceedings about family matters in the future.
As with any legal matter, seeking expert advice is essential to ensure that the agreement is comprehensive and compliant with the Family Law Act 1975. Engaging a qualified family law solicitor will clarify costs and guide both parties through the process, helping them achieve peace of mind regarding their financial arrangements.
If you need family law advice regarding the cost of Binding Financial Agreements, financial and property settlements, agreements, or parenting matters, please get in touch with our family law team to discuss your unique circumstances and ensure your interests are protected.