By Sharla Stevens
Binding Financial Agreements (BFAs) are contracts that couples can enter into either before they enter into a de-facto relationship or before marriage, during their de-facto relationship or marriage or after the couple has separated.
Within a BFA the couple are able to set out how their assets and debts are to be divided between the two of them and exclude the jurisdiction of the Family Courts to make orders about property settlement.
To ensure a BFA is binding each person must:
- Get independent legal advice about the effect of the BFA on their rights.
- Each person’s solicitor must sign a certificate confirming they have provided that advice and those certificates must be exchanged.
- Both people must sign the BFA.
- Be aware that material changes in future circumstances may be grounds to challenge the BFA. This is particularly so for BFAs that are signed either before or during a de-facto relationship or marriage, where there may be more uncertainty about changes in future circumstances (e.g. if the couple has children and the terms of the BFA have not taken that into consideration and one person suffers hardship).
The grounds on which a BFA may be set aside by a Court are set out in the Family Law Act in section 90K (for married couples) and section 90UM (for de facto couples):
- If there has been fraud, duress or unconscionable conduct;
- Where the BFA was entered into to defraud or defeat a creditor of either of the parties (or entered into with reckless disregard of the interests of the creditor);
- Where the BFA was entered into for the purpose of defrauding another person who is in a de facto relationship with one of the parties of the BFA or to defeat any claim that other person may have under the Family Law Act (or entered into with reckless disregard for that other person’s interests);
- The BFA is void, voidable or unenforceable;
- If circumstances have arisen since the BFA was made and it is impracticable for the BFA or part of the BFA to be carried out;
- Since the making of the BFA, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the relationship ro marriage) and as a result of the change, the child/ren or the person who has caring responsibility for the child/children will suffer hardship if the BFA is not set aside;
- If the BFA provides for a superannuation split, but there the superannuation interest is considered ‘unsplittable’.
Although it may be an uncomfortable topic for couples to broach, it does provide couples with more certainty in the event they do separate and provides the couple with provisions on how to divide their assets and debts, making it a quicker and more cost-effective option after separation.
If you need any advice or assistance with a Binding Financial Agreement please contact Cristina Huesch, or one of our solicitors, Sharla Stevens or Angela Li, at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance.