What is a Binding Financial Agreement (BFA)?

Perhaps more commonly known as a pre-nuptial agreement, a BFA allows a couple to agree on an acceptable division of assets. They can be entered into before the commencement of a marriage or relationship, at any point during the marriage or relationship and after separation.

Entering into a properly drafted and executed BFA can prevent the courts from having to interfere with the agreed property distribution – helping to provide some certainty when a relationship breaks down.

How binding are they?

A Binding Financial Agreement is binding on the Courts, provided they comply with the requirements of the Family Law Act 1975 (Cwlth) for married couples and the Family Court Act 1997 (WA) for de facto couples (including same sex couples). Non-compliance may mean that the BFA can be set aside or voided.

It is therefore essential that you seek legal advice when contemplation entering into a BFA and have a lawyer draft the document to avoid any problems at a later date.

If your BFA is entered into prior to or during the relationship, it is recommended that you review it regularly but particularly following a significant event such as the birth of a child or receipt of an inheritance.

What is in a BFA?

Generally a BFA will detail how the parties have agreed to divide their assets in the event that the relationship fails. The agreement deals with property, financial resources as well as spousal maintenance, and any incidental issues.

BFAs entered into prior to the commencement of a relationship may address such practical issues as:

Protecting existing assets or likely inheritances;

Ensuring that children of a previous relationship inherit;

Preserving the family farm or other business for future generations;

Providing more weight to the contribution of a higher income earner; or

Avoiding disputes about financial matters at the end of a relationship.

Information required for preparing a BFA

Before an agreement can be correctly drafted, a lawyer will need detailed information about your financial situation, for example:

The parties’ occupations and future earning capacity;

Superannuation entitlements;

The value of currents assets including vehicles, furniture, shares etc;

The current market value of properties;

Details of debts, loans, mortgages etc;

Details relating to children, previous marriages and the date of commencement of your relationship.

Binding Financial Agreements can provide significant comfort to parties before any relationship issues arise. If prepared in accordance with the law, they can provide certainty, and reduce stress and costs. Your affairs are resolved in a timely manner thus avoiding the possible long delays caused by court proceedings.

[Source:onecentatatime.com]Sourse: Thefinancebucks.com