Is a Binding Financial Agreement Right for You? | JCL Legal

Good Morning Everyone

As the final newsletter in my current series regarding Binding Financial Agreements in accordance with the Family Law Act 1975 (BFA”), I wish to address the question as to whether a BFA is suitable to your circumstances.

This question is only addressed after the parties have discussed at minimum the following questions:

1. Does one party have substantially more assets than the other?

2. Does a party own or is part, of a family business?

3. Do any of the parties have children from a prior relationship?

4. Does a party expect a substantial inheritance? and

5. Does one party have a significant difference in earning capacity? 

If one or more of those questions apply, I believe that consideration of a financial agreement should be considered in the light of the requirements as set out in the legislation and as determined by the Court in the cases.

The legislation provides that adults are able to contract out of the jurisdiction of the Family Law Act 1975 (“FLA”) and decide their own financial future, in the event of a breakdown in their relationship. This can only be undertaken each party has provided their full and complete financial situation to the other, negotiated the terms of the agreement freely without duress or fraud with each being provided independent legal advice prior to willingly executing the BFA. Each party must also acknowledge that have considered major events such as the birth of children; significant changes in assets and/or income; bankruptcy and the like.

The objective is to create a BFA that:

• reflects the parties’ genuine intentions;

• complies with the statutory requirements;

• is supported by independent legal advice;

• is negotiated fairly;

• takes account of the parties’ financial circumstances;

• anticipates reasonable future developments; and

• is reviewed when circumstances materially change.

If any of these factors are missing, then the BFA could be subject to a successful challenge. Binding Financial Agreements have become an important part of Australian family law providing couples with the opportunity to make their own financial arrangements rather than leaving all financial consequences of a relationship breakdown to future litigation.

The Family Law Act contains detailed requirements governing their formation and enforceability, including the requirements concerning independent legal advice under s 90G and the circumstances in which agreements may be set aside under s 90K. The process in creating the BFA is just as important as the document itself and should be approached as part of the parties’ broader financial, family and estate planning.

The reality is that there is no practical alternative to BFA’s. Consent Orders can be applied after separation but such orders must fall within the guidelines of fairness and equity as determined by the legislation.  

I have assisted many couples to draft their BFA in accordance with the requirements to ensure as far as possible that they are not subject to challenge. If you or someone you know is considering a Binding Financial Agreement, please have them contact me to discuss.

Wishing you a wonderful day,

Jeffrey Choy

JCL Legal

0419 233 670

[email protected]

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Legal Disclaimer: This guide is for informational purposes only and does not constitute legal advice.