The Binding Financial Agreement: How Can It Be Useful for a Property Settlement?

The property dispute process can be legally complex, and also typically involves negative emotions that can affect not just the couple, but also their family members. 

In addition, the breakdown of the marriage or de facto relationship can turn bitter, especially where there are children of the relationship and/or there is a large pool of matrimonial property. Finally, an ugly family law battle can lead to stress, anxiety, sadness, and loss of funds particularly where family law proceedings are commenced and proceed all the way to trial.

For estate planning and property dispute management hire property lawyer Sydney.

Apart from the emotional stress, family law battles and litigation can be expensive. Court proceedings can cost up to $50,000 or much more if the matter proceeds to trial. 

However, you may be able avoid costly court affairs with a Binding Financial Agreement. Family lawyers in Sydney are highly experienced in drafting a legally appropriate Binding Financial Agreement.  Such agreements need to be drafted very carefully and each party needs to obtain independent legal advice before entering into one.

The court is not necessarily bound to follow the provision of a Binding Financial Agreement especially where there have been changes in the parties circumstances since the agreement was entered into or the court thinks it would be unfair to enforce the Binding Financial Agreement and where a party has failed to fully disclose his or her assets.

It is important that both you and your spouse/ partner or ex-spouse/partner have a good understanding of the consequences of the agreement.

But what exactly is a Binding Financial Agreement? And how do they prevent court proceedings? And is it a good idea to hire a lawyer and prepare the agreement? A professional lawyer from the best law firms in Australia can help make the BFA process smooth and seamless. 

 What is a Binding Financial Agreement?

• A Binding Financial Agreement represents a well-articulated, legally valid agreement document between you and your spouse at the time the relationship is commenced or former partner or spouse when the relationship is in the process of being terminated. 

• The BFA formally records the agreement you and your ex-partner/spouse have reached regarding how your property and finances will be dealt with after your separation.

The Binding Financial Agreement should follow certain guidelines to become legally valid. Experienced divorce lawyers in Sydney can help you in this regard.

These guidelines are highlighted in the Section 90G & 90UG of the Family Law Act 1975 (Cth). Guidelines for BFA to become legally valid include the following: 

• The documents should be correctly signed by all the parties involved. 
• Each party should be furnished with a signed statement by a professional lawyer stating the advice was provided.
• A copy of the same signed statement should be shared with the other party or with the lawyer hired by the other party. 

If you miss any of these, your BFA becomes legally void. Therefore, it is essential that you hire family lawyers in Sydney with significant experience in drafting financial agreements. 

There are many common terms for Binding Financial Agreements or BFAs, such as;

• Pre-nuptial Agreements (popularly called prenups);
• Post-nuptial Agreements (post-nups); and
• Cohabitation Agreements.

The court considers all these agreements as Binding Financial Agreements.

What Does a Binding Financial Agreement Cover? 

A Binding Financial Agreement typically specifies how both parties have agreed to divide the common assets in case of separation. A BFA can include, but is not limited to, the following: 

• A detailed financial statement that clearly states the terms and conditions for property settlement. Moreover, the statement can also include superannuation entitlements.
• Details about financial support (maintenance) paid by one spouse for the other. Agreed arrangements for the children including child maintenance payments; and
• Any incidental issues

Therefore, a Binding Financial Agreement can deal with several practical issues that arise during a divorce. These include: 

• Avoiding unfair divisions and protecting the assets and inheritances
• Ensuring inheritance for children from previous relationships
• Preserving family businesses for future generations
• Giving more weight to the contribution of the higher-income earner
• Avoid legal battles and financial disputes when a relationship ends or during separation. 

Hiring the best divorce lawyers in Sydney ensures you resolve all these practical concerns and have a smooth divorce process. 

Wrapping Up

While ending a relationship can be complex, you may be able make the entire process much easier and more peaceful with a Binding Financial Agreement. To know more, connect with a family law practitioner today!