A Binding Financial Agreement (BFA) under Section 90UC 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 part way through 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 90UC of the Family Law Act 1975 (Cth) can be a useful way for parties to avoid lengthy and costly legal proceedings.
The value of a Binding Financial Agreement
While a Section 90UC 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 during 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.
- Helps 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 de facto spouse 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 separate in the future, 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 having already set out in a clear and legally binding manner, how your assets, liabilities and superannuation will be divided. This disputes after separation and provide both of you with a sense of certainty and closure at the earliest stage of separation.
- Reduced Conflict and Stress: By agreeing on how your assets and liabilities will be divided, a Section 90UC BFA can help to reduce future conflict and stress between separated spouses. This can be particularly valuable if the separation has been contentious or if you share children together.
- Protection of Assets: This type of Agreement can provide protection in the future 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 wish to keep, the Agreement can ensure that it is retained by the person it is important to. Likewise, it can protect an inheritance or redundancy you have received and/or your superannuation entitlements.
- Preservation of Relationships: By avoiding future legal disputes and court proceedings this type of Agreement can help to preserve an amicable relationship between separated spouses in the future. 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 down the road when a de facto separates, as it avoids the high costs of legal disputes and court proceedings. The couple is already legally bound to separate their property etc in a certain, previously agreed, manner.
Overall, a Section 90UC 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 in a situation where the couple had not already previously entered into the Agreement.
What you need to do:
In completing a Binding Financial Agreement under Section 90UC of the Family Law Act 1975 (Cth) after separation 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 – that it is a de facto relationship.
- 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, including further property accumulated after entering into the Agrfeement. 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 (eg. Spousal maintenance) provided by one party to the other in the event of separation.
- Sign the agreement: Both parties must sign the agreement, and their signatures must be witnessed by an independent third party.
- Seek legal advice: Before the agreement can become binding, both parties must seek independent legal advice from separate lawyers about the advantages and disadvantages of entering into the agreement at the time of entering it. Each person must have an independent lawyer sign a Certificate stating that they have given that advice and then the Agreement becomes binding.
- Keep a copy: Each party should keep a certified copy of the agreement, and the original should be stored in a safe place.
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