What is a binding financial agreement?
Binding Financial Agreements (“referred to as a BFA”) are commonly known as “pre-nuptial agreements”, “post-nuptial agreements”, “cohabitation agreements” or “separation agreements”.
For de facto couples a BFA can be entered into:
For married couples a BFA can be entered into:
Prior to entering into a relationship;
- During the relationship;
- After ending the relationship.
- Prior to marriage;
- During marriage;
- After the marriage ends.
By entering into the agreement you are contracting out of the provisions of the Family Law Act 1975 that would otherwise determine the division of your asset pool in the event of the breakdown of your relationship. This covers property (including superannuation) and your entitlements to spousal maintenance.
What is covered in a BFA?
How assets or financial resources, including superannuation are to be divided in the event of the breakdown of the relationship;
- the maintenance of either of the spouse parties (spousal maintenance);
- other incidental issues.
A BFA can only be binding if:
it is in writing;
- both parties have signed the agreement;
- both parties have received independent legal advice;
- it refers to the relevant sections of the Act –
- Section 90B of the Family Law Act 1975 relates to financial agreements before marriage;
section 90C relates to financial agreements during marriage; and
- Section 90D relates to financial agreement after divorce;
- Section 90UB relates to financial agreements before de facto relationship;
- Section 90UC relates to financial agreements during a de facto relationship;
- Section 90UD relates to financial agreements after a breakdown of a de facto relationship.
- The solicitor providing the legal advice certifies they have provided advice relating to the effects of the agreement and the advantages and disadvantages of entering the BFA;
- The party obtaining the advice signs an acknowledgement that they have received the advice.
When can a BFA be set aside?
The Family Court is able to set aside a BFA in certain circumstances. These include if:
The agreement was obtained by fraud; for example non-disclosure of a material matter. You should therefore satisfy yourself as to the assets and liabilities of the other party prior to entering into the agreement; or
- The agreement is void, voidable or unenforceable for example the binding requirements (which we address above) were not fulfilled; or
- Circumstances have arisen since the agreement was made that make it impracticable for the agreement or part of the agreement to be carried out; or
- Since the agreement was made, a material change in circumstances that relate to the care, welfare and development of a child of the relationship has occurred; and as a result of the change, a relevant person would suffer hardship if the court does not set the agreement aside. A relevant person would be the child, a person who has caring responsibility for the child, a parent, person with residence order or specific issues order in relation to care, welfare and development, or a party to the agreement.
- A party to the agreement engaged in unconscionable conduct in the process of developing the financial agreement; for example signing the agreement on the parties’ wedding day; or one party being in a far more powerful position than the other party.
The above grounds are detailed in sections 90K and 90UM of the Family Law Act.