Binding Financial Agreements

Pre nuptial agreements, commonly referred to as prenups, are entered into before the commencement of the marriage or de facto relationship. These are often incorrectly referred to as binding financial agreements but they are different. The primary reason they are different is that a BFA can be entered into at any stage of the marriage or de facto relationship.

It depends on your situation, but a BFA is a good idea if you have children from a previous relationship, own property and other significant assets, have a good income, are likely to receive any significant gifts or inheritances in the future or are the beneficiary of a trust.

A properly prepared binding financial agreement will provide financial security for both parties and prevent claims against each party in family court, saving both parties both time and money in the long run. Without a legal BFA, you and your ex-partner or spouse will need to negotiate a property settlement.

Both parties must consent for a financial agreement to be formed.

Our family lawyers will provide highly tailored legal advice based on your individual circumstances but here are some general advantages and disadvantages of BFAs to give you an idea.

Advantages:

• They act as a safety net by helping protect assets in de facto relationships and in marriages.
• It provides certainty as to how property and assets will be divided. Both partners will know what will happen if the relationship ends and what property and assets they will retain.
• Reduce the financial and emotional costs of potential family law proceedings post-separation
• It is a much more efficient method to dividing property and assets. Settling in Court can take many months and this can be dragged out if former partners cannot reach agreement.
• Ensures your children receive adequate financial support
• Gives peace of mind & financial security in the event the relationship ends
• Protects significant wealth
• Safeguard potential inherited wealth

Disadvantages:

• Can be uncomfortable to raise the topic
• It can cause mistrust or strain in the relationship as some individuals may view the agreement as a lack of faith in the relationship.
• It extinguishes the right for both parties to approach the Court for a property settlement or spousal maintenance entitlements that differ from what is set out in the agreement.

Yes, but challenging a binding financial agreement can be costly. However, there are certain circumstances where the Court may set aside a BFA.

• • The BFA was not drafted properly and does not comply with the Family Law Act 1975
  • The agreement was entered into under fraud or duress
  • A party entered into the agreement for the purpose of defrauding or defeating a creditor
  • Not all assets or relevant information was disclosed
  • Either or both parties have experienced significant changes in circumstances
  • There is a major change in the welfare and care of children
    Once an agreement is set aside, both parties can apply to the Court for a

property settlement

• • .

Our team of binding financial agreement lawyers can assist if you want to challenge the validity of a financial agreement (or, make sure your financial agreement stands).

There are other options, some de facto or married couples may choose to make an informal written or unwritten financial/property agreement but this is not legally enforceable in Court.

The other option is to apply to the Court for consent orders. Couples can make a financial agreement and have it submitted for approval to the Court. If deemed fair, the Court will make a consent order. Consent orders just like binding agreements are very difficult to alter once they have been made, that’s why it’s essential to get expert advice from a family lawyer.

Yes, to cancel or change a financial agreement both parties agree to enter into another agreement called a termination agreement. To become binding and enforceable, both parties must obtain legal advice.