There are many names for Binding Financial Agreements or BFA’s, including;
- Pre-nuptial Agreements (commonly known as pre-nups)
- Post-nuptial Agreements (post-nups)
- Cohabitation Agreements.
They are known by the courts as Binding Financial Agreements. There have even been movies about them and their enforceability and plenty of sensational newspaper stories but this article sets out the six key points you need to know.
1. How do they work?
A BFA allows a couple to agree in advance on an acceptable division of assets. After a relationship between a couple breaks down or is no longer workable, a BFA can reduce the financial stress of a separation and allow the couple to amicably separate without the need for costly, time-consuming and stressful court action.
A poorly written BFA may not protect you. Callea Pearce can properly draft your BFA to prevent the courts from interfering with the agreed property distribution and provide certainty at the time of the breakdown of any relationship.
2. When do the parties enter into a BFA?
BFA’s can be entered into before the commencement of a marriage or relationship or at any point during the marriage or relationship and even after separation. So if you are thinking of getting a BFA, there is no better time than now to come see us at Callea Pearce.
3. How binding are they on the Courts?
The short answer is that they are binding, provided they have been set up correctly. To be binding, there are certain requirements that BFA’s need to meet. If these items are not met, then the agreement can be void or set aside. It is important that the parties each obtain their own independent legal advice and have a lawyer draft and sign the document to avoid the agreement being set aside. Come see us and we will make the process as hassle-free as possible.
In addition, BFA’s should be reviewed about every two years or after a significant event in the lives of the parties, such as the birth of a child or one party receiving an inheritance. However, it is important to note that both parties must agree to any changes to a BFA and any changes must be documented. So don’t be a stranger, and be sure to come see us regularly to keep your BFA up to date.
4. What does a BFA usually cover?
A BFA can specify how the parties have agreed to divide the asset pool in the event the relationship fails. They deal with property, financial resources as well as maintenance, generally described as:
- The financial settlement (including superannuation entitlements);
- The financial support (maintenance) of one spouse by the other; and
- Any incidental issues
This means the following practical issues that commonly arise, are dealt with in the BFA:
- Protecting existing assets or likely inheritances
- Ensuring that children of previous relationships inherit
- Preserving family farms or other businesses for future generations
- Providing more weight to the contribution of a higher income earner
- Avoiding disputes about financial matters at the end of a relationship
5. What Callea Pearce will need to know when advising you about BFA’s
When we advise you about your BFA and before your agreement can be drafted, we take many factors into account, for example:
- Your occupation and future capacity to earn an income.
- Your superannuation entitlements.
- Your current assets including chattels, vehicles, shares, furniture, valuables.
- The current market value of property a party intends to own personally.
- Details of your liabilities including any loans, mortgages or debts.
- Whether there is any other family law financial agreement which may apply.
- The date when the cohabitation commenced between your and your partner
- The date when your relationship commenced.
- The date of your proposed marriage.
- Whether or not you have been married previously.
- The number and age of any children.
6. What are the benefits of having Callea Pearce execute your BFA?
A correctly executed BFA will provide you with some certainty and help avoid unnecessary arguments in the event that your relationship ends, as you have agreed in advance as to how your property will be divided. A BFA can help you feel secure knowing that the property you have accumulated before your relationship or marriage is safe. By reaching agreement in advance, the issues that occur after a break up are more likely to be resolved without costly legal expenses or court delays.
Callea Pearce can execute a BFA for you to provide you significant comfort prior to any relationship issues arising. A BFA will not only provide certainty but reduce stress, costs and time – avoiding lengthy court delays.
It is important to get your BFA done properly initially, and to get it reviewed from time to time.
If you or someone you know could is interested in a BFA, please don’t hesitate to CONTACT US or drop in to one of our offices. Callea Pearce Lawyers has offices located in Melton , Werribee and Bacchus Marsh .