Monday to Friday:- 8:45am – 5:15pm (Sydney Office)

Binding Financial Agreement

After a separation or divorce, couples may need to decide on their property and financial arrangements and how they divide their assets.

Some couples decide this before they enter a relationship and formalise it in a Binding Financial Agreement (“BFA“), colloquially known as a pre-nuptial agreement.

In Australia a binding financial agreement is also used to document your property settlement if you end a marriage or de facto relationship.

This can be achieved through negotiation or mediation with the help of our family lawyers in Sydney, who can draft a suitable agreement. Both parties need independent legal advice on the binding financial agreement for it to be legally binding.

It is important to realise that a BFA is a contract between the parties that’s both binding and enforceable. It is a property and financial agreement and doesn’t include custody or parenting arrangements. BFAs can be made at any point in a relationship, including before cohabitation, during marriage, or after separation or divorce.

It is important after a relationship breaks down to get independent legal advice. It will help you separate fact from fiction and give you clear guidance on what is relevant to your situation. It is an important first step to ensuring you understand your entitlements and allow you to take a considered approach to your financial circumstances. Whether you are ending a marriage or a de facto relationship the legal principles remain similar with some variations.

binding financial agreement lawyers

Factors to Consider When Dividing Assets

When dividing assets, several factors should be taken into account, including:

  • What assets and liabilities need to be divided, such as property, vehicles, savings, investments or other valuable possessions
  • Who brought specific assets and liabilities into the relationship, whether acquired before or after the relationship began
  • Who took care of the family during the relationship, such as raising children or looking after elderly relatives
  • Each party’s income at the time of separation and their potential to earn in the future
  • Arrangements for any children involved, such as custody, visitation and child support

The court looks at critical criteria when deciding on property settlements and these are differ depending on your relationship. It is important to understand the legal framework and how property settlement matters are decided so you understand your entitlements before signing a BFA.

What is a Binding Financial Agreement?

A binding financial agreement (BFA) is a legal document detailing a property settlement and how assets are divided between parties. It typically includes a brief history of the relationship, the pre-relationship assets of each party, any assets obtained during the relationship and how the assets will be divided following separation.

To ensure a BFA is enforceable, it must be properly drafted to clearly define the terms and conditions of the settlement, including any superannuation splits and/or spousal maintenance payments. A poorly drafted BFA may not hold up in court, leading to legal complications.

If you are ending a relationship you may wish to apply for consent orders with the Federal Circuit and Family Court of Australia FCFCOA. A consent order carries more weight than just a BFA alone.

Benefits of a Binding Financial Agreement

A Binding Financial Agreement offers several advantages over other methods of property settlement, including:

  • The drafting of a BFA is at the discretion of the parties involved, which can save time compared to other legal processes.
  • Parties can agree on how to divide assets in a way that suits them, and the agreement remains legally binding as long as both parties receive independent legal advice. On the other hand, consent orders must be approved by the Court and deemed just and equitable.
  • A BFA can be entered into at any stage of a relationship, whether it’s before or during living together, during cohabitation or a marriage, or after separation or divorce.

Potential Drawbacks of a Binding Financial Agreement

While a binding financial agreement offers clear benefits, there are also some potential drawbacks to consider. These include:

  • Both parties must obtain independent legal advice before signing a BFA. Their solicitor must explain the advantages and disadvantages of signing the agreement and sign a declaration within the BFA confirming that advice was provided. If one party doesn’t receive independent legal advice, the BFA is not enforceable.
  • A BFA may be deemed unenforceable if it’s poorly drafted or if it’s entered into under duress.
  • Ambiguous terms in a BFA can be interpreted to benefit the other party.
  • Enforcing a BFA through court can be more complicated than other methods of property settlement, as the Court will need to determine that the agreement is both valid and enforceable.

Providing clients with the best possible service and advice.

Looking for a Lawyer or Law Firm in Sydney?

You want to know that you are getting advice and real solutions. You not only want a lawyer who has strong experience and knowledge in legal matters, but a lawyer who can also navigate you through the commercial realities.

Request a meeting
Get in touch
We’d love to
hear from you
Contact Lawyers in Sydney

Contact us

Office Hours: Monday to Friday: 8:45am – 5:15pm
(We can accommodate appointments out of these hours if required.)

We provide our legal services across Sydney and surrounds, from Surry Hills to Hunters Hill. Whether you need our expertise in North Sydney, Abbotsford, Burwood, Greenwich, Hunters Hills, Cremorne, Chiswick, Bellevue Hill, Balmain or beyond, our convenient location allows us to serve locals in these suburbs and many more.

Feel free to leave us a message
Get in touch
We’d love to hear from you
  • This field is for validation purposes and should be left unchanged.
Providing legal services Australia-wide,
with several locations to serve you better.
Select State:
Contact us
Get in contact with us
  • This field is for validation purposes and should be left unchanged.