Bowen Buchbinder Vilensky

What is a Binding Financial Agreement, and Why is it Useful?

By Damien Bowen, Director at Bowen Buchbinder Vilensky Lawyers

20 March 2015

A Binding Financial Agreement (BFA) is an agreement between two parties in which they set out how assets are to be dealt with in certain circumstances.  There are three types of BFA :

  1. An agreement made before a couple marries, setting  out how their assets will be divided if the marriage comes to an end (a Pre-Nuptial Agreement).
  2. An agreement made during a happy marriage  setting how  assets will be divided if the marriage comes to an end; and,
  3. An agreement made after divorce recording how they have agreed to divide their assets.

These three types of BFA are also available for people in de facto relationships, whether straight or gay, where:

  1. They are about to start living together;
  2. Are living together; or
  3. Are separated.

To be binding:

  1. The agreement must be in writing;
  2. Each party must have independent legal advice before they sign the agreement;
  3. The parties and their lawyers must all sign the agreement.
  4. One party holds the original and the other the copy.

BFA’s can only deal with property and spouse maintenance.The definition of property is very wide and  encompasses house, furniture, cars, a business, shares, investments, intellectual property rights, patents, jewellery and artwork, superannuation and entitlements in trusts and estates.

Typically, BFAs have the following uses:

Before marriage.  In cases where there is a wide disparity in the wealth of the two individuals, a BFA can essentially get this disparity out of the way of the relationship, by resolving, up-front, how assets would be divided should the relationship come to an end.

During marriage.  In cases where one of the couple benefits from, say, a major inheritance, a BFA can help remove tensions about what would happen to assets should the relationship come to an end.

After separating.  A separating couple can agree on how they are dividing their assets using a BFA, rather than through proceedings in the Family Court, as a quicker and less stressful way of resolving matters, so that they can move on with their lives.

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