Are you married or living with your partner (or planning to do so)? Do you worry about how your assets and superannuation will be dealt with if you separate?
A Binding Financial Agreement is a legally binding document which sets out your agreement about how assets should be divided if you separate from your spouse or partner.
Who can have a Binding Financial Agreement (BFA)?
Married and defacto couples (including same sex defacto couples) can enter into a BFA.
A BFA between a defacto couple will become invalid if the couple marries. You will have to sign a new BFA with your spouse in order to have a valid and legally binding agreement.
Legal requirements for a BFA
You and your partner have to comply with the requirements of the Family Law Act 1975 in order to ensure that the BFA is legally binding. Some of the requirements are:
- You should each make full disclosure of your financial position, including your assets, liabilities, superannuation and business interests. If you omit any information, it may affect the validity of the BFA.
- Both of you have to be represented by separate lawyers. You cannot be represented by the same lawyer, even if you are in full agreement with each other.
- Your lawyers must each sign a Certificate confirming that independent legal advice was provided about your rights and obligations under the BFA.
- You and your partner should enter the BFA of your own free will.
When can I have a BFA?
You can have a BFA with your partner before starting the relationship, during the relationship or after separation.
A BFA at the beginning of the de facto relationship or marriage is often referred to as a “pre nuptial agreement”. You can decide how your assets are to be divided in case you separate.
You can also enter into a BFA during the de facto relationship or marriage if your personal or financial circumstances change (for example, if you receive an inheritance or if you start a business).
You can also enter into a BFA to divide your assets and liabilities after separation.
Should I enter into a BFA?
There are many advantages of a BFA. You can avoid the stress and cost of legal proceedings in the event of a separation. You will also have some clarity and certainty about how your assets will be divided if you separate. You can also ensure that any children from a previous relationship are provided for appropriately.
However, a BFA does not suit every individual. We consider your individual circumstances when advising you about whether or not to enter a BFA.
For further information please contact Michelle on 8362 6400 or email Michelle Crichton. Join our mailing list to receive updates and advice on current issues