No one wants to imagine a time when you and your partner are no longer together. However, having adequate protection over your finances and assets is invaluable and can give you peace of mind. No matter what type of relationship or at what stage you’re in, a Binding Financial Agreement (BFA) is the best protection from lengthy and costly litigation in the event of a separation.
When prepared correctly, a financial agreement is legally binding, and can protect your current assets such as property, intergenerational wealth or shares, and future assets such as inheritance. This ensures you can move on from your relationship breakdown with minimal stress and legal fees.
Introduced in Australia in 2000, a BFA allows de facto, married, soon-to-be-married and same-sex couples to enter into a legal agreement that protects their assets in the case of a relationship breakdown. As there are many different types of relationships in Australia, several binding financial agreement template PDFs are available. While this does promote inclusivity and equality among these relationships, determining which applies to your situation can be complicated.
There’s also a little bit more complexity to a BFA than meets the eye that you must be aware of. Parties must each obtain independent legal advice as to the advantages and disadvantages to themselves at the time of entering into the agreement AND each person must have the solicitor who gave that advice sign an Independent Solicitors Certificate of Advice annexed to the BFA (the parties themselves already having signed it) at which time the BFA becomes binding.
To make matters more complicated, a BFA of any sort can also be a “superannuation agreement”, “spousal maintenance agreement” or even a “puppy prenup.”
Can a binding financial agreement be overturned?
This is a common question our team often hear, and the answer is yes. There are a few circumstances where your binding financial agreement can be overturned, annulled or void. For instance, if you or your partner were not given adequate time to seek legal advice regarding your BFA and, therefore, did not understand the obligations or consequences of the agreement, the BFA can be made void.
If you or your partner were also under duress or pressured to sign the agreement, there are grounds to overturn the BFA.
Can I make changes to a binding financial agreement?
Yes, relationships grow and change over time, so naturally, it makes sense to want to make changes to your existing agreement. However, both parties must agree to the new changes in writing. These requested changes must also adhere to the legal requirements of BFAs.
BECAUSE EACH SITUATION IS UNIQUE, THERE ARE DIFFERENT TYPES OF BFAS:
- Financial binding agreements before living together (legal jargon: pre-cohabitation agreement) or before a de facto relationship (S90UB Financial Agreement)
- Financially binding agreements during living together (legal jargon “cohabitation agreement”) or during a de facto relationship (legal jargon: S90UC Financial Agreement)
- Binding financial agreement after separation, but before divorce (“during marriage”) or after the breakdown of a de facto relationship (legal jargon: S90UD Financial Agreement)
- Financial binding agreement templates for after divorce
You should also be aware of future circumstances, such as having children in the future. Failing to add this to your BFA can result in the document being overturned.
Protecting your future and avoiding uncertainty is worth entering a BFA. Don’t navigate this alone, contact us to learn more about BFAs today.
