Binding Financial Agreements
If you’re thinking about getting married or entering into a de facto relationship, one area of concern for you might be the protection of your assets in the event that, for whatever reason, the relationship doesn’t work out the way you hoped.
What is a Binding Financial Agreement?
A Binding Financial Agreement is a written document that is entered into under the Family Law Act and allows parties to outline how their property is to be divided in the event that they separate or have already separated.
By signing a Binding Financial Agreement the parties forgo any rights they may have to make a claim against their partner under the Family Law Act. Instead, the Binding Financial Agreement outlines how their property is to be divided if the parties separate.
Is a Binding Financial Agreement the same as prenuptial agreement?
Many people have heard of ‘prenuptial agreements’ or ‘pre-nups’ through American television shows or movies. Such agreements can be entered into under Australian Family Law but they are referred to as ‘Binding Financial Agreements’.
When can I enter into a Binding Financial Agreement?
Binding Financial Agreements are not just for people considering marriage. Binding Financial Agreements can be entered into almost anytime including before the relationship or cohabitation commences, during or after marriage and after separation.
Can de facto couples have a Binding Financial Agreement?
Binding Financial Agreements are also able to be entered into in de facto relationships and same sex relationships. People considering entering into de facto relationship or marriage can set out how their assets are to be divided in the event of their relationship breaking down.
When is a Binding Financial Agreement valid?
For a Binding Financial Agreement to be valid there are a number of technical and legal requirements to be satisfied. It must be in writing and signed by each party and their lawyers. If the agreement is not drafted carefully and accurately it may not be enforceable and it may later be challenged or even set aside by the court.
Do I need legal advice for a Binding Financial Agreement?
The law states each party must receive their own independent legal advice regarding the Binding Financial Agreement for it to be binding and enforceable. Each party must discuss the agreement with their own lawyer. The agreement needs to be voluntarily entered into and once properly signed is binding on the parties to the agreement provided each person has received independent legal advice from a legal practitioner regarding the effect of the agreement on the rights of that party and the advantages and disadvantages at the time the advice was provided to the party making the agreement.
What is the advantage of entering into a Binding Financial Agreement?
By entering a Binding Financial Agreement you are provided with certainty as to the division of your property should you separate from your partner. It also allows you to protect the assets that you have entered the relationship with or potentially future assets that you may acquire such as by way of an inheritance.
By entering a Binding Financial Agreement, the parties are not bound by the Family Law Act provided the agreement is not set aside. The Binding Financial Agreement also allows you to make provisions that suit you and your spouse or former spouse specifically.
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