Binding financial agreements are documents that allow spouses(or de facto spouses) to divide up their property and finances in the event of separation.

Binding Financial agreements (“BFA’s) are often referred to as pre-nups, post-nups or BFA’s. BFA’s are often favorable because:

• The parties to the BFA are able to choose how they want their assets and finances split in the event of a separation, rather than engaging in arguments, mediation and court battles after separation occurs. They tend to provide some certainty to couples.
• The time and money that is involved in drafting a BFA is usually far less than what a couple might expect to expend if they had to go to court to seek property orders.
• The parties to the BFA can elect to deal with their assets in a way that the court might not necessarily think is fair or just (known as “just and equitable”).
• There is no need for the BFA to be signed off or “approved” by the court before it is executed, and usually parties do not have any involvement with the court unless one of them seeks to enforce the terms of the BFA or challenge the validity of the BFA.
• The terms of the BFA are usually confidential(the BFA may be involved in future court proceedings and if so, the BFA may at that stage be non-confidential).

There are several types of BFA’s, and these are largely based on the time that the parties enter into the BFA.  The types of BFA’s are:

• Pre-marriage BFA’s (often referred to as pre-nups).
• Pre-de facto BFA’s where the parties do not intend to marry, which are like a pre-nup above, however entered into before a de-facto relationship commences. These BFA’s are more rare however are sometimes used.
• BFA’s entered into during a marriage without separation– effectively pre-empting what the parties will do with their assets if they do separate.
• BFA’s entered into during a de facto relationship without separation.
• BFA’s entered into after a separation, but before a divorce. These are often used whilst parties are awaiting the twelve month time period between their separation and filing for a divorce as a means to undertake a property settlement.
• BFA’s entered into after divorce. These are commonly used when parties are undertaking property settlement negotiations and settlement before the 12-month time limit for property settlement expires, or after the time limit expires.
• BFA’s entered into after de facto partners separate.
• BFA's to terminate another BFA, or a termination agreement.

There are different legislative requirements for each type of BFA, and it is usually best for those considering entering into a BFA to approach a lawyer to determine which BFA is right for them.  It is important for parties to be aware that though they may be able to draft the BFA themselves (this is not advised due to the complexity of BFA’s and the various legislative requirements for each) they will need to each obtain their own, separate, independent legal advice about the advantages and disadvantages of entering into the BFA.

For more information about BFA’s and whether a BFA might be right for you, why not book a 15-minute free consultation with us? Alternatively, send us a message and we will answer your questions!

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