What is a binding financial agreement (BFA) and is having one right for me?

binding financial agreement

A binding financial agreement (BFA) is a legally binding document that your family lawyer can create for you based upon your instructions.

Its purpose is to set out your property interests in the event of a separation in a simple, predictable and final way. A BFA may include distribution of property, debts, superannuation, spousal maintenance and other financial matters. A BFA can be created before, during or after a de facto relationship or marriage.

In order for a BFA to be legal and binding, it must comply with strict formalities. This includes the requirement that both you and your partner must receive independent legal advice before entering into the agreement and that both you and your partner are entering into the BFA by your own free will.

There are very limited circumstances in which a BFA can be terminated or varied. These circumstances include if the agreement was entered into by fraudulent means, if the agreement hasn’t been drafted properly, or if a major change has occurred to either your or your partner’s circumstances and the current BFA would cause either of you major financial hardship.

There are three types of BFAs. These are discussed in more detail below:

  • A BFA entered into before marriage or de facto relationship (commonly referred to as a pre-nuptial agreement)

This type of BFA is for you if you are interested in deciding how to divide your property before a marriage or a de facto relationship is entered into. The BFA will outline the split of assets, liabilities, spousal maintenance and other financial matters that will occur in the event of a marriage or relationship breakdown.

  • A BFA entered into during marriage or de facto relationship

This type of BFA is for you if you are already married or in a de facto relationship and are interested in deciding how your property should be split in the event of a marriage or relationship breakdown. The BFA will outline the split of assets, liabilities, superannuation, spousal maintenance and other financial matters that will occur.

  • A BFA entered into after separation

This type of BFA is for you if you were married or in a de facto relationship but have since gone through a relationship breakdown. The BFA will outline the split of assets, liabilities, superannuation, spousal maintenance and other financial matters.

Talk to your family lawyer about whether a BFA is the best option for you.

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