What is a Binding Financial Agreement?
A Binding Financial Agreement (also known as a “BFA” or “Financial Agreement”) is a written agreement or contract between two parties that sets out how the parties want to divide their financial resources if the relationship comes to an end.
Binding Financial Agreements are often called Prenuptial Agreements, Postnuptial Agreements, Cohabitation Agreements, Separation Agreements and Divorce Agreements.
Under the Family Law Act 1975 you can enter a financial agreement either before, during or after your relationship has ended.
Agreements Before your Relationship
Let’s say you are planning on living with your partner. You can make an agreement before moving in together, that sets out a plan of what should happen if things don’t work out. Similarly, you can make the same type of agreement before getting married. This type of agreement is commonly referred to as a Pre – Nuptial Agreement.
Agreements During your Relationship
You may be in a marriage or a de facto relationship where financial issues can cause one or both partners to feel insecure. This insecurity can cause arguments due to the potential threat to the family home, an inheritance, a business or any number of other things. In this instance, a financial agreement can help end the arguments by providing certainty that assets are protected from the future claim.
If you are in a de facto relationship this type of agreement is may be referred to as a Cohabitation Agreement. If you are married this type of agreement is commonly referred to as a Post – Nuptial Agreement. However, legally these are both referred to as Binding Financial Agreements.
Agreements After your Relationship
If you are unfortunate enough to be dismantling a marriage or de facto relationship, a financial agreement can draw a line in the sand and provide some finality to your financial relationship.
Questions around how to divide or deal with the family home, superannuation, investments or debts can be put to rest, allowing you keep the items you have agreed to keep and prohibiting the other party from making a further claim.
You can make your agreement whether you are separated, divorced or exiting a de facto relationship.
These types of agreements are often referred to as separation or divorce agreements but they are all types of financial agreements.