A Binding Financial Agreement (BFA) under Section 90UB of the Family Law Act 1975 (Cth) is a legal agreement that outlines how property, assets, and liabilities will be divided between parties in the event of a separation and is prepared before you enter into a de facto relationship in order to set out how parties financial affairs will be adjusted in the event of a future separation. A BFA can be made under Section 90UB of the Family Law Act 1975 (Cth) and can be a useful way for parties to avoid lengthy and costly legal proceedings.
The value of a Binding Financial Agreement
While a Section 90UB BFA can offer financial protection to you, there are also non-monetary benefits that can be gained from having one in place. Some of those benefits include:
- A sense of security and peace of mind for the parties involved. By agreeing before you enter into your de facto relationship on how your assets and liabilities will be divided in the event of a separation, you can avoid the stress and uncertainty that often comes with legal disputes and court proceedings if in the future you do separate.
- Help to promote communication and trust between de facto couples. As you work together to negotiate and agree on the terms of the agreement you find you have different perspectives on financial matters and these conversations can work to bring a couple closer. The transparency involved in talking with your prospective de facto partner about each of your financial circumstances and wishes for the future can improve communication and trust. This can be particularly valuable for couples who may have different perspectives on financial matters or who may be concerned about the potential for conflict in the event of a separation.
- An opportunity for you both to clarify your expectations and responsibilities regarding financial matters during the relationship. By setting out clear guidelines and expectations, the agreement can help to prevent misunderstandings and disputes over financial matters in the future.
If you have already separated the value of such an Agreement can include:
- Finality and Closure: This type of Agreement can provide a sense of finality and closure to the separation process by setting out setting our clearly how assets, liabilities and superannuation will be divided. This can help to avoid ongoing disputes and provide both of you with a sense of certainty and closure.
- Reduced Conflict and Stress: By agreeing on how your assets and liabilities will be divided, a Section 90UB BFA can help to reduce conflict and stress between separated partners. This can be particularly valuable if the separation has been contentious or if there are ongoing disputes over financial matters.
- Protection of Assets: This type of Agreement can provide protection for assets that are important to one or both of you. For example, if one party has a family heirloom or sentimental item that they wished to keep, the Agreement may ensure that it is retained by the person it is important to. Likewise, it can protect an inheritance or redundancy received and/or your superannuation entitlements. This leaves separated people with certainty and relief in that their property settlement was agreed to long before the separation.
- Preservation of Relationships: By avoiding legal disputes and court proceedings this type of Agreement can help to preserve the relationship between separated partners. This can be particularly valuable if you have children together or if they wish to maintain a civil relationship for other reasons.
- Cost Savings: This type of Agreement can also provide cost savings for separated de facto couples, as it can help to avoid the high costs of legal disputes and court proceedings.
Overall, a Section 90UB BFA can provide a range of benefits to separated de facto couples, including finality and closure, reduced conflict and stress, protection of assets, preservation of relationships, and legal cost savings. Most importantly, it can ensure you avoid the scrutiny of the Court as to how you adjust your property between yourselves in the instance your division of property would not likely be approved by the Court by way of seeking Consent Orders for property settlement.
What you need to do:
In completing a Binding Financial Agreement under Section 90UB of the Family Law Act 1975 (Cth) before entering into a de facto relationship the Agreement must set out the following:
- Identify the parties: The agreement should identify the parties by their full names, date of birth, and current addresses.
- Declare the nature of the relationship: The agreement should declare the nature of the relationship, declare the parties are not already in a de facto relationship and have not separated.
- Declare assets and liabilities: The agreement should list all assets and liabilities of each party at the time of entering into the agreement, including real estate, investments, savings, superannuation, and debts.
- State the division of property: The agreement should set out how the parties’ property will be divided in the event of separation. This may include a percentage split, specific assets to be allocated to each party, or any other arrangements agreed between the parties.
- Outline financial support: The agreement should state whether there will be any financial support provided by one party to the other in the event of separation. This may include spousal maintenance payments.
- Sign the agreement: Both parties must sign the agreement, and their signatures must be witnessed by an independent third party.
90 minutes of legal advice included