Binding Financial Agreements (BFA’s) can be entered into:
- before marriage or the commencement of a relationship;
- at any point during the marriage or relationship; or
- following separation.
They can deal with property, financial resources and maintenance issues and are used to:
- avoid disputes about financial matters on separation;
- give greater weight to the contribution of a higher income earner;
- achieve the protection of existing assets or expected inheritances;
- ensure that children of previous relationships inherit; or
- preserve family farms or other businesses for future generations.
For a BFA to be ‘binding’, the document must meet the requirements set out in the Family Law Act 1975 (Cth) or the Family Court Act 1997 (WA) (as the case may be). If the BFA is not compliant, the BFA may be void or set aside by the Family Court.
The main legislative requirement for a BFA to be binding, is that each party to it must obtain independent legal advice as to their rights and entitlements, and the advantages and disadvantages to them of entering into the BFA. The family lawyer who provided the advice is then required to execute a certificate which is attached to the BFA, confirming they have provided such independent advice.
Certificate of independent legal advice
For a family lawyer to discharge their obligation to a client, it is necessary to provide sound legal independent advice to the client as their rights and entitlements under the Act, relevant to the particular circumstances of the matter, and as to the advantages and disadvantages to the client of entering into the proposed BFA.
To do that, the family lawyer must obtain detailed instructions from the client about the relationship including the financial position of each party, the contributions that have been made by each party prior to entering into the proposed BFA, the intentions of the parties moving forward with respect to paid employment, raising a family and how it is proposed that assets are to be acquired and owned.
The Family Lawyer also needs to be satisfied that the client has not only received but understood the advice that has been provided.
If it is binding
The effect of entering a properly drafted and executed BFA, is that the Family Court will not have the power to interfere with the settlement terms contained within it, upon the breakdown of the marriage or relationship. This gives rise to certainty and avoids unnecessary arguments about how property should be divided. It is also avoids the need for expensive legal costs and the time associated with endless Family Court appearances.
At Davies & Co law firm, we provide written confirmation of the advice we provide in relation to a proposed BFA and we seek our client’s acknowledgement that they have understood our advice. This cannot be done in a brief consultation.
If you have any doubt as to whether you have entered into ‘binding’ BFA or you want to ensure that the BFA you enter into is ‘binding’, please call of our office to further information or to make an appointment.
Davies & Co are highly experienced Family, BFA and Divorce Lawyers