Video Transcript:

What is a Binding Financial Agreement?

Today’s video will give you a quick overview of what binding financial agreements (or BFA’s) are and the benefits that they can offer.

So, what are BFA’s?

BFA’s can be a valuable tool for couples seeking to manage their financial affairs. They can be entered into:

  • before marriage or before entering into a de-facto relationship (commonly called pre-nups);
  • during a marriage or de facto relationship (also known as post-nups or cohabitation agreements); or
  • after separation (often referred to as termination agreements).

Instead of leaving property division in the hands of the Family Court, BFA’s allow couples to decide how a wide range of financial matters are to be dealt with if they separate. These include matters relating to property, superannuation, regulation of finances during a relationship, spousal maintenance, other assets and liabilities, and financial resources such as business interests and inheritances. BFA’s must be drafted according to very strict legal requirements under the Family Law Act 1975 to make them valid and enforceable.

What are some of the benefits of BFAs?

  • Clarity and certainty: BFAs provide a clear understanding of how assets will be divided in case of separation, reducing potential conflict and legal costs.
  • Protection of assets: They can safeguard pre-marital assets, inheritances, and business interests, for example. BFAs can be particularly useful for people who have significant wealth or those with children from a previous relationship.
  • Flexibility: Couples can tailor the agreement to their specific needs and circumstances.
  • Control: BFAs allow couples to make their own decisions about asset division, rather than leaving it to a court, as they limit the court’s ability to intervene in certain situations.
  • Tax benefits: there can be significant tax savings (e.g. CGT or Transfer Duty) if a property division between a couple is made in accordance with the terms of a BFA.
  • Reduced stress and cost: By pre-empting disputes, BFAs can save time, money, and emotional distress associated with drawn-out legal battles.
  • Death of a spouse: a BFA is also enforceable on the estate of the deceased spouse.

Contact us at LEDA Lawyers if you are considering entering into a BFA or if you need to review an existing one and we would be happy to assist you.