When a couple decides to separate, they may reach an agreement regarding the division of their property and arrangements with regard to their finances. This agreement can take the form of a separation agreement or a Binding Financial Agreement, (BFA) under the Family Law Act 1975 (Cth) (the Act). Some couples also use a BFA to decide how to arrange their financial affairs in the event of separation in the future, known as prenuptial or pre-cohabitation agreement.
What matters are included in a BFA?
A BFA sets out the financial arrangements between two parties after, or in the event of, separation. The agreement may cover financial matters, such as the division of assets, property and entitlements to spousal maintenance. The agreement may cover some financial matters relating to children, such as the payment of school fees, however, it does not cover child support payments or parenting arrangements. These arrangements can be set out in a separate Binding Child Support Agreement or parenting plan respectively,
On the other hand, consent orders made in Federal Circuit Court and Family Court of Australia (Family Court) may cover both parenting and financial matters.
Requirements for a BFA
There are a number of strict requirements that must be met for a BFA to be binding, some of which can be summarised as follows:
The agreement must be in writing and signed by the parties.
Each party must receive independent legal advice from a qualified lawyer about the effect of the agreement on their rights and the advantages and disadvantages of entering into the agreement.
A statement must be included in the agreement, signed by each party, that they have received legal advice before signing the agreement.
The agreement must not be entered into under duress, fraud, or undue influence.
The agreement must specify the relevant provision of the Act that the parties seek to exclude or modify.
The agreement must be certified by a legal practitioner as to the fact that independent legal advice was provided to each party and that they signed the agreement voluntarily and with full knowledge of its effect on their rights.
It’s important to note that a BFA can be set aside by the Family Court in various circumstances, some of which include fraud (misrepresentation of a material matter) or a material change in circumstances since the agreement was made, such as having a child which results in financial hardship.
Conclusion
If you are going through a separation or divorce in Australia, it’s important to consider the options available for resolving financial and property matters. A BFA can provide a flexible and effective way of documenting your agreement, or to help protect your assets in the future, in the event of a separation.
It’s a strict requirement to seek professional legal advice from a qualified Australian Lawyer before entering into a BFA.
If you need assistance with a BFA, or consent orders, Quick Laws has drafted 100s of BFAs for couples all across Australia. Contact us today for a FREE consultation.
This article contains information of a general nature only and is not specific to your circumstances. This is not legal advice and should not be relied upon without independent legal or financial advice, specific to your circumstances.