ASSET DISTRIBUTION UPON BREAKDOWN OF RELATIONSHIP
A Binding Financial Agreement is a legally binding document under the Family Law Act that sets out how a couples’ assets will be distributed upon the breakdown of a marriage or de facto relationship. It can also include provisions for spousal maintenance.
They are sometimes referred to informally as “pre-nuptial agreements” or “prenups”. They are somewhat similar to Orders made by the Family Court of Australia or Federal Circuit Court of Australia regarding the distribution of property if a relationship, although there are some key differences, which are set our below.
When can a Binding Financial Agreement be entered into?
Unlike Court Orders, which can only be made upon the termination of a relationship, a Binding Financial Agreement can be executed prior to marriage or the commencement of a de facto relationship, following the breakdown of the marriage or de fact relationship and even during the marriage or de facto relationship.
What are the benefits of a Binding Financial Agreement?
Binding Financial Agreements entered into prior to or during a relationship are a way to give each party certainty and a clear understanding of how their property will be distributed if their relationship unfortunately breaks down.
Agreements entered into after separation are an alternative way to resolve property settlement matters without involving the Court. They can be far more cost effective than lengthy and stressful Court proceedings.
They also give parties the flexibility to decide for themselves how they want their assets to be distributed and set out the basis for the distribution of the assets in the agreement.
Binding Financial Agreements can also be prepared and executed quicker than Applications for Consent Orders, where there is often a delay between the filing of the proposed orders and the documents being approved and sealed by the Court.
What are the requirements of a Binding Financial Agreement?
There are a number of procedural requirements for a Binding Financial Agreement to be valid, including:
- That the agreement is signed by both parties;
- That each party has obtained independent legal advice with respect to the advantages and disadvantages of entering into the agreement;
- That the agreement contains a statement signed by each party confirming that they have received that advice, together with a statement signed by each legal representative that they have provided that advice;
- That the agreement has not been terminated by the parties or set aside by a Court exercising its jurisdiction under the Family Law Act.
When can a Binding Financial Agreement be set aside?
Even if all the procedural requirements for a Binding Financial Agreement have been met, there are still limited circumstances in which they can be set aside. These include:
- Where a party was forced to enter into the agreement or entered into the agreement under duress or undue influences;
- Where a party acted fraudulently in relation to the entering of the agreement;
- Where there has been unconscionable conduct by one of the parties to the agreement;
- Where there has been a significant change in circumstances in relation to a child of the relationship;
- Where the intent of the agreement was to avoid a party or the parties having to make payment to a creditor;
- Where the agreement is unenforceable or invalid due to incompleteness, mistake or uncertainty.
Our Expert Lawyers
Whether a Binding Financial Agreement is right for you and your relationship is something that will need to be determined on a case-by-case basis. We are happy to assist you whether you are looking to prepare a Binding Financial Agreement, or seeking independent legal advice on an agreement that you have received.