Binding financial agreements in Queensland, Australia
Are you going through a separation or divorce and worried about your financial future? If yes, then binding financial agreements may be of interest to you. As lawyers practising in Queensland, Australia, we frequently come across clients who have little understanding of what a binding financial agreement entails and how it can benefit them.
In this article, we will answer some of the common questions about binding financial agreements and provide insight into how they can be used to achieve a fair and equitable outcome, and reduce the financial stress, when separating from your partner or divorcing.
What is a binding financial agreement (BFA)?
A binding financial agreement, or BFA, is a legal document that outlines how your property, assets, and liabilities are to be distributed in the event of your separation or divorce. It is a signed agreement between both parties and may cover spousal maintenance and child support as part of the financial settlement. It is a private agreement that is binding on both parties.
What is the purpose of binding financial agreements?
The primary purpose of a binding financial agreement is to provide certainty about how your assets and liabilities are to be distributed in the event of a separation or divorce.
When are binding financial agreements written?
This agreement can be entered into before, during, or after a marriage or de facto relationship. It can cover matters pertaining to financial support, property, and any other financial arrangements between the parties.
Binding financial agreements set up before a relationship or marriage commences are commonly referred to as ‘pre nuptial agreements’. However, this is not the technical term.
While it might seem unromantic or distrustful to draw up an agreement before a relationship or marriage commences, it is often a wise decision. This process allows both parties to openly discuss financial matters, which can lead to a better understanding and alignment of financial goals and expectations within the relationship.
Pre nuptial agreements or ‘pre-nups’ can provide a clear, predetermined resolution to potentially contentious issues in the unfortunate event of a relationship breakdown. Many legal practitioners would argue that it’s beneficial to have these discussions and agreements in place early on, to ensure transparency and mitigate potential disputes in the future.
Why are post-nuptial agreements more difficult to agree on?
A post-nuptial agreement, established after a marriage or de facto relationship has commenced, can often be more challenging to negotiate than pre-nuptial ones. When a relationship fails there is often a level of mistrust and tension and there is a need to resolve disputes to reach agreement.
Can binding financial agreements be changed?
Yes, a binding financial agreement can be revised if circumstances change. However, this isn’t an automatic process and requires both parties’ consent.
If you and your partner agree to modify the agreement, consult with a legal professional to ensure the revisions are correctly drafted and legally binding. Once the amendment is drafted, both parties need to sign it, and it should be attached to the original agreement. This amended agreement will then supersede the original one.
If one party does not agree to the revision, the changes cannot be made unilaterally. In such circumstances, it may be necessary to seek legal advice or court intervention.
It’s crucial to remember that the strength of a binding financial agreement lies in its certainty and finality. Therefore, any changes to it should be carefully considered and made in accordance with legal advice, to ensure the revised agreement continues to provide protection and predictability.
Is it worth getting a binding financial agreement?
A binding financial agreement is an essential document to have when entering into a marriage or de facto relationship. It is particularly important if you have assets that you want to protect in the event of a separation or divorce. The document provides certainty about the distribution of property and assets in the event of a relationship breakdown.
A binding financial agreement does not mean that your relationship will fail. If anything, it provides peace of mind and ensures that both parties are aware of their legal rights and obligations.
How strong is a binding financial agreement?
A binding financial agreement is a powerful document that is legally binding on both parties.
However, it is important to note that the validity of the agreement is dependent on certain requirements being met. The agreement must be in writing, signed by both parties who have received independent legal advice. The agreement needs to comply with the Family Law Act and must have been entered into voluntarily.
As for writing your agreement, it is best to speak to a lawyer. A lawyer will ensure that the agreement is legally binding and meets all the requirements under the Family Law Act. An informal agreement will have little value in the family court.
The best approach to a financial agreement for an equitable outcome
The key to achieving a fair and equitable outcome in your financial agreement, and any property settlement, is to approach the matter with an open, honest, and reasonable attitude. You should both be committed to working through the process, and it is mandatory to seek independent legal advice.
Financial agreements can cover a range of different matters, so it is important to consider all your options. This may include dividing your property, assets, and liabilities or identifying any future financial support, such as spousal maintenance or child support.
By taking a reasonable and practical approach to the financial agreement, you will be able to achieve a fair outcome for both parties.
Conclusion
A binding financial agreement is a powerful document that can provide certainty and peace of mind to both parties. It is a legal agreement that outlines how your assets, property, and liabilities are to be distributed in the event of a separation or divorce. It is worth getting a binding financial agreement, especially if you have assets that you want to protect.
It is important to approach the agreement with an open, honest, and reasonable attitude, and to seek expert advice. By ensuring that the agreement is drafted with legal requirements in mind, you can achieve a fair, equitable outcome in your separation or divorce.