Binding Financial Agreements

Binding Financial Agreements (BFA) - (known as prenup or prenuptial agreements in other countries)

The Family Law Act in Australia allows couples to sign financial agreements prior to marriage to allow the division of property to be agreed up front. In other countires, these are often referred to as a 'prenup' or 'prenuptial agreement'. Although these agreements are seen as a very difficult conversation to have with a partner, they can avoid a lot of issues in the event a relationship breaks down. These agreements are also useful when one or both parties have significant assets prior to commencing the relationship and they wish to ensure if the relationship does breakdown, that they are able to keep those assets.

FAQ

What is a BFA?

What is a BFA?

The Family Law Act of Australia allows couples to sign financial agreements for them to formalise their agreement about the division of property, in the event of a breakdown of the relationship. These financial agreements are called “Binding Financial Agreements”, or BFAs. Although it might be an awkward or difficult conversation to have with your partner, BFAs can help prevent lengthy and expensive property division proceedings in a Court. A BFA is also an alternative to applying for Consent Orders in the Court.

What are Consent Orders?

What are Consent Orders?

Consent Orders are just as they sound – an agreement made by the consent of the parties, which are formally made into orders by the Federal Circuit and Family Court of Australia, or a local Magistrates Court (in Queensland) depending on your circumstances. If you have separated from your partner, whether de facto or married, you can choose to apply for Consent Orders. If your matter relates only to property, does not involve parenting matters, and you both live within the same Court District, then you can apply for Consent Orders to be issued from your local Magistrates Court.

Who can use a BFA?

Who can use a BFA?

This strategy is not limited just to couples prior to their marriage (which is sometimes known colloquially as a “pre-nup” or a “pre-nuptial agreement”). Couples, including de facto couples, can choose to make a BFA at any point in their relationship – whether this is:
  • pre-cohabitation, for de facto couples or married couples; or
  • during the relationship, for de facto couples or married couples; or
  • after separation, where one person moves out of the home or both people agree on a date of separation but live in the same house (this is a legally technical area and might trip you up if you are not careful, so you should seek legal advice if this situation applies to you), for de facto couples or married couples; or
  • after divorce, for married couples.
Couples who fall into any of the above categories, or individuals with significant assets who are about to enter a new relationship, should consider whether a BFA is right for them.

Should I make a BFA or Consent Orders?

Should I make a BFA or Consent Orders?

This will depend on your circumstances. If you have not separated from your partner, then a Court cannot make Consent Orders so a BFA is your only option if you want to formalise your agreement. As a BFA is make without the intervention of the Court, they are not orders which can be enforced. This means that if one party does not do what they say they will under the BFA, there is no ability to bring contravention (breach) proceedings against that party and a fresh application to the Federal Circuit and Family Court of Australia will need to be made. The advantage of BFAs is that they are generally quicker to put together, if both parties agree on the division of property, and a filing fee is not payable. On the other hand, Consent Orders can be enforced against a party who breaches them. If you have concerns that your partner will not do what they have agreed to, then this is most likely your best option. The disadvantages of Consent Orders is that you do have to pay a court filing fee, they generally take longer to put together, and may take some time to be returned from the very busy Federal Circuit and Family Court of Australia (who deal with Family Law matters from all over the country) or the local Magistrates Court (in Queensland) if you are able to apply there.

My partner and I agree how we are going to divide our property. Why do I need to see a lawyer?

My partner and I agree how we are going to divide our property. Why do I need to see a lawyer?

Even if you and your partner agree about how your property will be split if your relationship breaks down, the Family Law Act of Australia says that you need to get independent advice about the BFA. Any agreement reached will not be effective unless, among other requirements, each of you receives independent legal advice. Your lawyer will need to talk you through the effect of the BFA on your rights, how it is different from what the Court would consider (if the matter was litigated), and the advantages and disadvantages of the BFA to you. If you have any questions about the process involved, please do not hesitate to contact our office.

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