What is a Binding Financial Agreement (BFA)?

Sometimes called a Prenuptial Agreement or Financial Agreement, a BFA is an agreement whereby parties may regulate their financial affairs formally within a marriage/de facto relationship either before, during or at the end of a relationship.

A BFA is sought in particular when the parties are older and have established assets of their own. The parties have their own children from previous marriages and relationships to consider. In such cases it is often the desire of all parties to protect the previously owned assets for the benefit of their own children.

In situations where long established family businesses/wealth (handed down from many generations) belongs to one party of the relationship, it is often required that the younger generation enter into a BFA so that the wealth/family business/farm property is preserved.

Reasons vary as to why parties require a BFA and may include:

• A party’s wish to continue making their own arrangements for the ownership and
  management of their property, income and financial resources.
• Increased certainty as to the property retained by each party in the event the
  marriage/relationship fails.
• The security that assets acquired prior to the relationship (including inheritances) is to
  be retained by the party owning the assets in the event of the breakdown of the
  relationship.
• The avoidance of possible conflict with respect to financial matters before, during and
  after a marriage/de facto relationship.

It is imperative that each party is provided with independent legal advice before the parties enter into an agreement and statements of independent legal advice must be provided to each of the parties and exchanged with the BFA.

Such advice includes:

• The effect of the agreement on the party’s rights,
• What the advantages and disadvantages of making the Binding Financial Agreement are for the parties at the time of making the agreement and also into the future.

It is important to note that a BFA continues in force and effect notwithstanding the death of a party and is binding on the legal representatives.

If de facto couples marry, having previously entered into a BFA, such BFA will automatically be terminated.