7 points to be aware of before you enter into a Financial Agreement
Family Law - 7 points to be aware of before you enter into a Financial Agreement & why you may need one
- Binding Financial Agreements (BFAs) can be entered into before you commence a de facto relationship (including same sex) or marry, during, or after the relationship has broken down and you have separated.
- A BFA isn’t viewed as terribly romantic; however it can certainly alleviate the stress of financial issues if the relationship does ultimately break down. It may prove to be worthwhile to have such a formal agreement in place, particularly if you enter the relationship with far superior financial interests than your partner.
- BFAs must comply with the Family Law Act 1975 (Cth) (“the Act”). The Act makes provision for parties to enter into a binding legal agreement regarding their financial arrangements in the event of their relationship breaking down or if one party predeceases the other.
- For a BFA to be legally binding each party needs to receive independent legal advice before signing the Agreement. The legal representative for each party must sign a certificate stating that they provided their respective clients with advice as to the effect of the Agreement and their rights under the Act. For it to be legally binding you can’t do it yourself.
- In the event of the de facto relationship or marriage ending, BFAs can cover the division (between the parties) of assets, superannuation entitlements, financial resources (such as Trusts) and financial support (spousal maintenance) as well as issues incidental to those matters.
- Once separated, there are two ways to formalise an agreement reached between the two parties in relation to a property division: (i) using a BFA or (ii) entering into Minutes of Consent Orders and filing the Orders, together with an Application for Consent Orders, with the Court.
- Under the provisions of the Act, BFAs can only be set aside by the Court on grounds that include: fraud; failure to disclose relevant financial information; creditors’ petitions; unconscionability; impracticality; and material change in circumstances that will cause hardship to a child or to the party who will have the ongoing primary care for a child of the relationship if the Agreement is not set aside.