A binding financial agreement is a legally enforceable method ensuring that both you and your partner’s contributions to your relationship are duly recognised in terms of relationship assets.
Should there be a separation or in the unfortunate event that one of you passes away, such an agreement safeguards your financial interests. It ensures that you or your beneficiaries maintain control over your assets, offering a layer of protection and peace of mind
A binding financial agreement or BFA (also known as a ‘prenup’) is a legally binding agreement between a couple.
A binding financial agreement (BFA), commonly referred to as a ‘prenup’, is a legal contract established between two individuals, be it a married or de facto couple.
Upon signing a BFA, both parties mutually agree on a predefined method for the division of assets (property) and liabilities (debts), should they choose to separate or in the event of a partner’s demise.
While BFAs are legally binding and serve as a solid foundation for asset protection, it’s crucial to note that they can be challenged and potentially overturned under specific conditions. However, their primary objective is to mitigate potential property disputes, providing clarity and security to both parties involved.
Whether you’re entering a new relationship, in the midst of one, or even parting ways, binding financial agreements can be drafted and executed before, during, or after a relationship’s tenure.
To many, binding financial agreements or BFAs might seem ‘un-romantic’. However, in a practical light, possessing a BFA parallels having a reliable insurance policy.
It’s a safeguard you hope never to utilize. Yet, if unforeseen circumstances arise, it’s a straightforward and cost-efficient approach to preserving both your and your partner’s rights.
With a BFA in place, should a separation occur, the division of assets and debts won’t be at the discretion of a judge. This pre-defined agreement empowers couples to sidestep potential property disputes and the associated legal costs. Everything is transparently laid out in writing, detailing the entitlements of each party regarding assets and debts.
But the utility of BFAs isn’t confined to separation scenarios. In the unfortunate event of you or your partner passing away, the matrimonial asset pool distribution adheres to the stipulations of the BFA. Such an arrangement can be invaluable in ensuring the beneficiaries of the deceased partner are catered for. Furthermore, if the majority of matrimonial assets rest under the deceased partner’s name, a BFA guarantees that the surviving partner obtains their rightful share.
Binding financial agreements can be nullified in two primary ways:
It’s pivotal to note that, similar to initiating a BFA, both parties must obtain a certificate of advice from independent solicitors when putting a termination agreement into action.
But, what’s the recourse if there’s discord, and both parties can’t reach consensus on signing a new BFA or a termination agreement?
Under specific circumstances, the Court possesses the authority to issue an order to set aside a BFA or the termination agreement. Such situations encompass:
If you’re contemplating annulling your binding financial agreement, our adept family law team is at your disposal. Ensure you’re guided by professionals when navigating such complex terrains.
If you’re in a marriage or a de facto relationship, reading about how binding financial agreements work in Victoria can be helpful.
In Victoria, creating a binding financial agreement normally costs $2,500–$5,000. The more complex your financial situation, the more your BFA is likely to cost.
This cost includes both the drafting of the agreement document itself and legal representation for you and your partner (which is required by law to make a BFA valid).
If you breach a binding financial agreement, your partner may choose to commence legal action against you. They can seek a court order for remedies such as the transfer of property that you owe them under the BFA, interest on that property, or even damages if they have suffered loss as a result of your actions.
Keep in mind that anyone attempting to enforce a financial agreement will still need to prove their case in court with a solicitor’s help.
Although it’s possible to write a binding financial agreement on your own, BFAs are complex documents that must meet a strict set of criteria to be legally valid.
You and your partner will also need to be provided with independent legal advice from different lawyers – your lawyers must sign certificates saying that they gave you advice, and also give a copy of each certificate to their client’s partner. Although the Court can make a financial agreement binding without legal advice, it will only do so if not doing so would be unjust and inequitable.
As such, it’s always better to pay an experienced family lawyer to draft a BFA and provide you with advice.
A justice of the peace (JP) or a solicitor can witness the signing of your BFA. Because your lawyers will provide you and your partner with certificates of legal advice anyway, they can act as witnesses for your BFA.
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