Finances after breakdown of relationship – Consider a Financial Agreement

Family Law, Binding Financial Agreement

Note: this is not to be regarded as legal advice for your personal situation. It is a quick outline of one option to consider. For further information, please get in touch, and we’ll be happy to help.

An often unconsidered option to addressing property split after separation is a Financial Agreement. There are various provisions under the Family Law Act 1975 (the Act) establishing the availability of such agreements to be put into place instead of placing reliance upon formally accepted Court-approved orders.

Whilst Court orders can either be by Consent of the Parties or Court-enforced (determined by the Court), there is the real potential of time delay and high costs. When approving Consent orders or determining what Orders to put into place, the Courts are required to consider what is just and equitable in each individual case.

Financial Agreements mostly cover off property and financial resources but may also address spousal and child maintenance. Financial Agreements are determined by the parties entering into the Agreement; there is no requirement for Court approval in relation to the contents of the Agreement. Unless the strict requirements under the Act are met for signing off the Agreement, then the Agreement is not ‘binding’. Once an Agreement is executed according to the strict requirements of the Act, it becomes a Binding Financial Agreement (BFA). This means that all the property and financial resources included in the BFA can no longer be addressed by the Court nor contested by the Parties to the BFA. Any property or financial resources not covered by the BFA will be required to be approved or determined by the Court. It is possible, however, in certain circumstances, for the Courts to address spousal maintenance.

The time period for making a BFA will depend upon each individual case but generally can often be less time than the time for finalising Court orders. Again, depending upon the amount of property, financial resources and each party to the Agreement, costs may be less than, equal to or greater than costs associated with formal Court Orders. One reason is due to the requirement of each Party seeking independent legal advice in relation to the Agreement and the attestation of such advice as part of the process.

For a more detailed understanding of these agreements, please do not hesitate to contact us.

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