Binding Financial Agreements
How Binding Financial Agreements protect couples from future financial disputes
Frequently asked questions
How to know if a BFA is right for you?
They can also play a crucial role in:
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Couples with significant assets or financial disparity;
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Business owners and professionals;
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People entering a second marriage or de facto relationship; or
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Those wanting to avoid court proceedings in the event of a separation.
If you’re not sure whether a BFA is suitable for your situation, speaking with an experienced family lawyer can help clarify your options. Whether you are entering a new relationship, planning for the future, or dealing with the aftermath of separation, Dormer Stanhope is here to guide you with clarity and confidence.
Protecting Business Interests and Inheritance with a BFA
If you own a business, hold interests in trusts or companies, or expect to receive a significant inheritance, a BFA can be a strategic way to preserve these assets.
They can also play a crucial role in:
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Estate planning
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Succession planning for family businesses
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Structuring future wealth protection across generations
The next question, why should you consider a BFA?
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Clarity and Protection - A BFA removes ambiguity. Both parties know what will happen with property, superannuation, and finances if the relationship ends.
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Reduces Conflict - With terms agreed in advance, couples can avoid the stress and expense of litigation over property division or spousal maintenance.
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Predictability - By setting out financial expectations early, BFAs help couples plan for the future, including investments, children, and retirement.
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Asset and Business Protection - BFAs are particularly valuable where one or both parties have significant personal assets, family wealth, or business interests that they wish to protect.
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Useful for Blended Families or Second Relationships - BFAs can safeguard inheritances or children’s future entitlements from a previous relationship.
It is crucial to note that while BFAs offer stability, there are situations where they can be challenged and set aside by the Court. These situations include:
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Fraud or Non-Disclosure: Failing to fully disclose assets or income at the time of the agreement.
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Undue Influence or Pressure: If one party was coerced or didn’t have a genuine opportunity to negotiate.
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Lack of Independent Legal Advice: Legal advice must be specific and adequate. A 10-minute meeting is unlikely to satisfy this requirement.
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Significant Change in Circumstances: Especially where the care of children is concerned and one party may suffer hardship if the BFA is upheld.
How do you prevent this from happening?
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Give Full Disclosure: Be transparent about your financial situation.
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Engage Quality Legal Advice: Both parties must seek independent, experienced family law advice.
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Aim for Fairness: Agreements skewed heavily in one party’s favour may raise red flags.
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Update as Needed: Life changes; as such, your BFA should be reviewed when circumstances change.
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Document the Process: Keep records of legal advice, negotiations, and disclosures.
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Use Clear Language: Avoid vague or complex wording that may cause confusion later.
But how do they work? And are they worth it?
A Binding Financial Agreement is a legally recognised contract under the Family Law Act 1975 (Cth) that allows couples, married, de facto, or separated, to agree in advance on financial matters. These include:
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Property settlement
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Spousal maintenance
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Division of assets and liabilities
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Financial management during the relationship
BFAs can be entered into:
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Before cohabitation (for de facto couples)
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Before marriage (as a prenuptial agreement)
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During a relationship or marriage
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After separation or divorce
For a BFA to be legally binding, both parties must:
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Provide full and frank financial disclosure;
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Receive independent legal advice; and
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Sign the agreement voluntarily, without coercion or undue influence.
When done properly, a BFA can prevent costly legal battles and provide financial certainty in an emotionally difficult time.
Everything You Need to Know About Binding Financial Agreements
Binding Financial Agreements (BFAs) have become popular for couples looking to manage their financial arrangements, whether they’re planning to live together, get married, or have already separated. Commonly referred to as “prenups”, BFAs offer clarity, certainty, and peace of mind by outlining how assets, liabilities, and financial responsibilities will be dealt with during the relationship or in the event of separation.