Binding financial agreements – Turnbull Hill Lawyers

Transcript

If you’ve separated and are considering entering into a binding financial agreement, it’s critical that you obtain independent legal advice to determine whether this type of agreement is appropriate for you.

Hi, I’m Sally Elphick, and I’m a family lawyer here at Turnbull Hill Lawyers. You might be wondering what a binding financial agreement is. Well, today I’m going to briefly explain what they are and their advantages and disadvantages.

A binding financial agreement, or BFA, is a formal document that sets out the terms of a financial separation between a married or de facto couple. Essentially, it determines who gets what when they separate.

There are three types of these financial agreements. The first is for relationships before marriage or cohabitation agreements, similar to prenups in America that you may have heard of. The second is during marriage or relationship agreements. And thirdly, after divorce or separation agreements.

The value and benefit of a binding financial agreement cannot be underestimated. A fair, well-thought-out agreement can result in an orderly financial settlement that can save you tens of thousands of dollars in legal costs, and the enormous emotional cost of a legal dispute.

So what are some of the advantages of a BFA? Well, one, a BFA is significantly more cost and time effective than being involved in court proceedings.

Secondly, once a BFA is signed, it is instantly in effect.

Thirdly, a BFA permits the avoidance of stamp duty payable for the transfer of a property, which can save you thousands of dollars.

Fourth, a BFA can include agreements that may not necessarily be ordered by a court. For example, a court requires complete financial separation between parties, whereas a BFA does not. And if you and your ex want to remain in business together or keep a joint bank account, you can.

And fifth, a BFA can assist in keeping a relationship between you and your ex amicable, which can prevent additional stress and be incredibly important when there are children involved.

Whilst there are many advantages to a BFA, there are also disadvantages, such as: one, there is no judicial oversight to ensure that the BFA is just and equitable. This basically means that it is fair. However, we can provide you with advice of what is in the realm of what a court would likely order to ensure that the agreement is fair for you.

Second, a BFA is not registered with a court or anywhere else. So if an issue does arise, such as your ex doesn’t follow the obligations under the BFA, you will be required to commence court proceedings, which then can become expensive and time consuming.

Third, a BFA cannot cover parenting arrangements. You instead will require a parenting plan or court order for future parenting arrangements to be implemented.

Fourth, issues can arise with uncertainty or ambiguity of terms, but your lawyer should be able to mitigate most of these issues.

Fifth, third parties not in the relationship, such as family members, cannot be bound by a BFA except in the case of a superannuation splitting agreement. This can create issues where loans are involved, etc.

And sixth, the court can set aside the BFA. If you or your ex apply to the court. This means that the BFA can be voided as if it never existed, and a further settlement be determined by the court. This can result in additional stress, costs, and time.

Many things can cause this, such as it being signed under duress, failure to disclose a fact, fraud, or significant change in circumstances since the document was signed, such as the birth of a child.

Overall, binding financial agreements can be incredibly beneficial, but they aren’t appropriate for everyone’s circumstances.

If you would like advice on whether this type of agreement would be appropriate for you and in your best interests, please contact me or the Family Law Team at Turnbull Hill Lawyers. We would be very happy to assist you.