What is a Binding Financial Agreement and Should You Sign One?

We all know that Family Court proceedings can be a lengthy, costly and emotional process. The Family Law Act gives the Family Courts jurisdiction to determine how property and financial matters may be dealt with upon the breakdown of a marriage or de facto relationship.

Many people wish to avoid the challenging and difficult litigation process by entering into a Binding Financial Agreement. Once parties enter into a legally Binding Financial Agreement (“BFA”), they forego their rights to apply to the Family Law Courts for the determination of their financial and property matters.

This blog post will explain what legally Binding Agreements are and the advantages and disadvantages of BFAs to help give you insight as to whether a Binding Financial Agreement is the right solution for you.

What is a Binding Financial Agreement?

There are many advantages of entering into a Binding Financial Agreement, including:

• You have certainty in the outcome of your property settlement and financial matters in the event of a relationship breakdown;
• You have the flexibility to determine your own property settlement;
• You can secure assets, such as assets you held at the commencement of the relationship, and assets acquired during the relationship; 
• You can avoid the cost, time, emotion, and risk of litigation where the outcome of your property and financial matters lies in the hands of the Family Law Court;
• The Agreement can assist in Estate Planning and tax relief.

There are also disadvantages in entering into a Binding Financial Agreement, which includes.

• What may seem like a fair division of the assets at the time of drafting the Binding Financial Agreements, possible contingencies may arise that were not considered which could render an unfair outcome for one of the parties;
• Engaging two separate lawyers or legal practitioners can be an expensive process;
• The family law surrounding a BFA is complex and therefore if one party sought to set a BFA side, there is uncertainty about how the Court would deal with the Agreement.

Summary

The breakdown of a relationship is a very difficult time for all those involved. The emotional and financial stress of a court battle can no doubt cause even more distress in already challenging circumstances.

Couples often consider making Binding Financial Agreements in advance to avoid a hard situation becoming even harder.

A Binding Financial Agreements can be a cost-effective way to protect the assets you have worked so hard for and also to protect your financial future, as well as the future of your children.

It is also important to remember that Binding Financial Agreements are complex contracts that require specialised family law act advice.

Binding Financial Agreements must be specifically tailored to your individual circumstances, based on insight and strategic advice by the solicitor drafting and/or advising on the Agreement.

Failing to have adequate advice and/or drafting of the Agreement can often lead to Binding Financial Agreements being set aside by the Court.

Independent Legal Advice

At KMB Legal, we have experience in advising and drafting all aspects of Binding Financial Agreements. We believe your own unique circumstance provides the foundation of the Binding Financial Agreements.

We take no “cookie-cutter” approach when drafting the document and/or providing advice to ensure you get an outcome that is just right for you.

Our team of Family Lawyers are here to guide you toward the best solution for your circumstances.