Binding Financial Agreements
East Coast Law is a trusted family law firm, providing comprehensive legal services to individuals and families in Newcastle, Toukley, Maitland, Edgeworth & Port Macquarie. Our specialists are experienced in all aspects of family law, including the negotiation and ratification of binding financial agreements including Prenuptial Agreements, Postnuptial Agreements, and Financial Separation Agreements.
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What is a Binding Financial Agreement?
A binding financial agreement or BFA is a legally binding agreement between a couple on how their assets and liabilities are to be divided in the event that the relationship breaks down and the couple separates or divorces.
A binding financial agreement can be entered into by a couple at any stage of their relationship including:
- Before marriage
- During a marriage or de facto relationship
- Before filing for divorce
- After a divorce or the end of a de facto relationship
Binding Financial Agreements (BFAs) can refer to a variety of different financial agreements referred to in the Family Law Act, 1975. Common titles such as prenups, postnups, cohabitation, divorce and separation agreements are all examples of BFAs.
In order for a binding financial agreement to be legally binding under Australian Family Law a number of strict criteria must be met:
- Each party must be provided with independent legal advice on how the agreement will affect their rights, as well as any associated advantage or disadvantage that may come if or when the agreement comes into effect.
- Each party must be provided with a signed statement by their lawyer confirming that proper advice was provided.
- The agreement must be signed by both parties.
- A copy of the signed statement provided by the lawyer for each party must be given to the other party.
- The agreement must not have been terminated or otherwise set aside by a court.
All binding financial agreements (where upheld) effectively exclude both parties from having the division of assets and liabilities decided in Family Court. Unless overturned or excluded by the court, what is agreed to is legally enforceable.
As a legally binding document, it is very important that the BFA is carefully and properly drafted and only signed under the guidance of an experienced and trustworthy family lawyer.
Prenuptial Agreements
A prenuptial agreement, commonly known as a prenup, is a binding financial agreement that is entered into by a couple before they are legally married.
A prenup will generally cover the division of assets such as property, finances, and superannuation as well as any debts or liabilities should a divorce occur. A prenup will often include other matters such as spousal maintenance and child support as well as conditional arrangements in preparation for future events.
Where successful, a prenuptial agreement can afford a level of certainty and security for a couple entering into a new relationship. However, there are many reasons why a court might set aside a prenup, invalidating its arrangements.
Common reasons a court might set aside a prenuptial agreement include:
- Failure to properly disclose the full extent or value of the assets owned by either party at the time of drafting.
- Failure to provide provisions for future children of the marriage at the time of drafting.
- Failure to draft an agreement that is just, equitable and otherwise fair for both parties.
- Unreasonable pressure from either party to coerce the other into signing the agreement.
- Use of the agreement as a condition of the marriage continuing, shortly before the wedding is to occur.
For more information on whether a prenuptial agreement might be suitable for your specific circumstances please contact our team to discuss your options.
Postnuptial Agreements
A postnuptial agreement, commonly known as a postnup, is a binding financial agreement that is entered into by a couple after they are legally married.
A postnup is very similar to a prenup in that it covers the division of assets and liabilities should a separation or divorce occur. A postnup is often used to update a prenuptial agreement or for those seeking an agreement who have not entered into one before marriage.
All the same pros, cons and potential to be set aside by the court exist for postnuptial agreements as discussed above for prenups.
Financial Separation Agreements
A financial separation agreement, also known as a divorce agreement, is a binding financial agreement in which separated or separating couples can formalise the division of their assets and liabilities. This type of agreement can also contain provisions for child support and maintenance where required.
Financial separation agreements can be created through an informal “roundtable” between both parties and their solicitors, or more formal Family Mediation sessions, with the aim of settling property and asset issues without the expense, stress and uncertainty of having the courts decide.
Financial separation agreements have many benefits. By keeping the process out of court it will be significantly faster, cheaper, and far less likely to cause further emotional stress. Once signed it will provide certainty to both parties and prevent future disputes and the potential for court action. It is also possible that this type of resolution can provide further savings on stamp duty for the transfer of real estate and personal items between parties.
Experienced and trusted legal advice for your negotiations
The careful preparation of a binding financial agreement can save you a great deal of time, stress, and expense in legal fees. However, it is very important that the BFA is carefully and properly drafted and that each party receives quality, independent legal advice before signing anything.
Our highly experienced team of solicitors will guide and represent you through the drafting process to ensure your interests and entitlements are strongly advocated for. We thoroughly examine every aspect of the agreement and explain in plain language to make sure you understand exactly what the outcomes of signing this document will be.
Once we are in agreement that the BFA is fair and equitable, our team will proceed with all necessary processes to ensure the agreement is legally binding under Australian Family Law.
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