Binding Financial Agreements (BFAs) are contracts that allow couples to decide how assets will be distributed if the relationship ends. They can be made before, during, or after a relationship, and apply to both married and de facto couples.
"BFAs remove the Family Court's jurisdiction to divide assets if done correctly." — Ella Hickman, family law director
Key Details
-
Cost: Creating a BFA typically ranges from $4,000 to $5,000 for a straightforward agreement, but can exceed $10,000 including independent legal advice for both parties.
-
Legal Requirements: Each party must receive independent legal advice for the agreement to be binding. Agreements may be challenged if signed under duress, without effective legal advice, or if there is a significant change in circumstances or fraud.
-
Usage: BFAs are commonly used when one partner has significantly more assets, such as property, savings, or expected inheritance. They are also used after separation to avoid court proceedings.
Expert Statements
Yianni Kordos (principal lawyer, national family law firm) noted a "big uptick" in interest in BFAs. He stated that straightforward agreements can cost between $4,000 and $5,000, and that parties should treat them as binding.
Miranda Kaye (Associate Professor of Law, University of Technology Sydney) explained that BFAs are contracts that can be made before, during, or after a relationship. She noted that there is no register of BFAs, making it difficult to know how many exist or how often they are challenged. She stated that they can be set aside if done under the wrong section of the Family Law Act or if they don't comply with statutory terms.
Ella Hickman (director and principal lawyer, Perth family law firm) stated that BFAs remove the Family Court's jurisdiction to divide assets if done correctly. She noted that many people fail to factor in the cost of independent legal advice for the second party, around $5,000. She recommended against signing a BFA close to a wedding due to potential undue influence.
Additional Information
-
Post-separation BFAs: These are used to formalize asset division without court involvement, offering privacy. However, unlike court orders, they have no obligation to fairness.
-
Challenges: BFAs can be challenged if not properly executed, including failure to follow legal requirements or misrepresentation of assets.
This article contains general information only. Individuals should obtain independent professional advice for their specific circumstances.