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Binding Financial Agreements

Binding Financial Agreements

Expert advice on Binding Financial Agreements

What is a binding financial agreement?

When a relationship starts or ends, both parties may agree to a property settlement to divide their assets. Financial agreements (or BFA’s as they are commonly referred to) are used both before relationships start and after relationships end. A binding financial agreement is one legal tool (of many) that can be used in family law.

BFA’s are done through agreement or mediation and is recorded in a legally binding agreement once specific steps are taken with both parties receiving independent legal advice.

A BFA is an agreement which sets out the details of a property settlement and how the assets and liabilities of a relationship are to be divided. A BFA covers the division of property, superannuation and, amongst other things if required, spousal maintenance.

When properly drafted, a BFA will be the key document recording each party’s final position on how property and assets are divided, where superannuation is paid and, if required, any spousal maintenance. A BFA which is not properly drafted can be challenged in court and found unenforceable, and it is therefore important to receive proper advice as early as possible.

Advantages of a binding financial agreement

BFAs can be drafted at any time during a relationship, before or after marriage and even after divorce, and can be a more time-efficient and cost-effective way to divide assets than going to
court.  BFAs also equally apply to de facto relationships, through there are differences that may need to be carefully considered depending on your personal circumstances.

One of the main advantages of BFAs is that they give the parties have control over how their assets are divided. The parties can agree to divide their assets in any way they like, but it important to speak about the division with a suitably qualified lawyer about any settlement terms. This can be helpful for couples who have complex financial situations or who have specific assets that they want to keep separate.

Another advantage of BFAs is that they are legally binding, subject to a number of important exceptions Once a BFA is signed and witnessed by a lawyer, it is a matter of compliance with the terms and no court intervention is required. An agreement can provide peace of mind for both parties, knowing that their assets will be divided in the way that they have agreed.

Disadvantages of a binding financial agreement

Binding financial agreements can have disadvantages, particularly when they are not properly prepared, including:

  • Both parties must obtain independent legal advice. This can be expensive and time-consuming but is necessary to ensure that both parties know the terms of the agreement they are making.
  • BFAs can be found to be unenforceable if poorly drafted or if they were entered into under duress or relevant financial matters are incomplete or vague. If a BFA is unenforceable, the parties may have to go to court to have their assets divided.
  • Any ambiguous or vague terms in a BFA can be interpreted to favour the party that did not draft the BFA. This means that it is important to have a BFA drafted by a lawyer who is experienced in family law.
  • An application to the court to enforce a BFA is more complicated than other ways of dividing assets. This is because the court will need to determine that the BFA is both valid and enforceable or not.

BFA’s are important and complex legal documents which will dictate how you and your current or former partner interact with each other and how your assets will be divided. Failure to comply with a BFA, or to properly prepare a BFA, can give rise to litigation seeking to enforce the obligations of a BFA, or set it aside as invalid.

Our lawyers ensure that the legal documentation that we prepare is going to stand the scrutiny of Court and that the terms are clear and concise.

For many people they may have limited exposure to how property settlements are negotiated and resolved. A family lawyer will be integral in giving you legal advice on a BFA or property settlement as pull on their extensive litigation experience to guide you in what a court may see is fair and reasonable.

What should I consider when dividing assets?

When looking at dividing your assets there are many factors to consider. This includes:

  • What assets are being divided;
  • Who brought certain assets into the relationship;
  • What each party is earning at the time of separation and what their future earning capacity is; and
  • Any other relevant matters that are too innumerable to set out and depend on each person’s circumstances, both current and future.

Working out your entitlements and the division of assets in family law can be daunting if you have recently separated. Our lawyers can provide clear guidance and expert legal advice and you can make informed decisions.

The division of assets in family law often require the careful consideration of the personal and commercial circumstances in conjunction with a thorough knowledge of the technicalities of family law in Australia. Whether you have a simple or complex pool of assets we can assist. We help clients determine what an equitable property settlement looks like for them and are skilled in negotiating family law settlements. Strategy and case management is crucial to getting the best outcome in your separation or divorce settlement.

Where you have a family trust or complex assets, such as businesses it is important to engage a legal team that can effectively manage your matter. Business and complex assets require further skill and expertise beyond the remit of family law and often require commercial law knowledge.

Getting expert family law advice

If you have an issue or query, we can assist you by developing a clear path of action that works best in your circumstances. This involves many alternative dispute resolution options, negotiation strategy estimating your likelihood of success should court be necessary.

Where you require assistance on working out entitlements and the division of their assets our family lawyers can provide clear advice. Whether you have a simple or complex pool of assets we can assist. We help clients determine what an equitable property settlement looks like for them and are skilled in negotiating family law settlements.

Where you have a family trust or complex assets, such as businesses it is important to engage a legal team that can effectively manage your matter. The division of assets in family law often require the careful consideration of the personal and commercial circumstances in conjunction with a thorough knowledge of the technicalities of family law in Australia.

As an alternative to a BFA , read more about consent orders: here.

To get advice about BFAs speak to one of our family lawyers on 1300 794 559 or complete our online enquiry form.

Providing clients with the best possible service and advice.

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Our Brisbane Lawyers will provide you with expert legal advice as well as practical solutions. Our law firm has extensive experience in guiding client through their matter addressing commercial considerations and real-life situations and resolving issues quickly.

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