Can you create a binding financial agreement after separation?
A binding financial agreement (BFA) can be drawn at any time before, during or after a marriage or a de facto relationship.
It is wise to draw up a BFA as soon as possible after separation, as if you fail to reach agreement with your ex-partner, a court application for a property settlement must be made within two years from the date of separation for de facto couples, or within 12 months of your divorce date for married couples.
What is a binding financial agreement?
A binding financial agreement is an agreement setting out all the terms of how a couple’s finances will be managed and how their assets will be divided, in the event of a separation or a divorce.
As each marriage or relationship comes with its own set of circumstances, couples may choose to include whatever terms they agree upon that suit their particular situation. That means they are excluded from the Family Court’s power to make decisions.
Couples can include or exclude certain assets in their agreement which can cover all financial matters, such as properties, businesses, investments, inheritances, spousal maintenance entitlements, superannuation and even debts. Clauses can be inserted to include or exclude specific assets that were acquired by either party prior to the marriage or de facto relationship.
All assets must be truthfully disclosed, as a BFA may be set aside by the Court if it is later discovered that a party had either acted fraudulently, failed to disclose an asset or had deliberately valued it incorrectly.
Binding financial agreements are enforceable but may be amended, replaced or terminated by mutual consent, if or when circumstances change.
Who is entitled to draw up a binding financial agreement after separation?
Drawing up a BFA is usually a fairly complex affair requiring both parties to obtain their own independent legal advice and can only be prepared by a family lawyer. Upon agreement, the lawyers will draw up the BFA and the lawyer for each party will issue a certificate certifying that legal advice was obtained.
Why would you create a binding financial agreement after separation?
Creating a binding financial agreement after separation provides several benefits for both parties.
- It allows both parties to negotiate their own terms and reach an agreement that suits their individual circumstances
- It allows both parties to seek an agreement outside the parameters of Family Law.
- It can be far quicker and less costly than seeking a settlement through the Court.
- Reaching a mutually agreed settlement paves the way for a more amicable post-divorce relationship with your ex.
- It provides peace of mind knowing that your ex cannot make any further claims in future.
Can I use a template I found online to create a binding financial agreement after separation?
Although it is possible, it is not usually recommended by legal professionals.
A binding financial agreement is a complex legal document that requires much care and consideration as it can have a detrimental effect on your finances for years to come if not set out correctly and in accordance with the law.
As Australian Family Law makes it mandatory for both parties to receive legal advice, this ensures that both parties involved are fully informed and know exactly what they are signing.
The temptation to save a little money creating your own BFA without a lawyer can be too big a risk to take considering how much it may cost if not done correctly and things go wrong.
Isn’t it better to draw up a binding financial agreement before marriage?
Yes, absolutely. Nobody wants to enter into a marriage or relationship with the idea that it may someday break down. Drawing up a BFA provides peace of mind for both partners going into a marriage or relationship, knowing full well that their interests will be protected in the event of a breakdown and their assets will be divided exactly how they have already agreed.
By having a BFA in place before marriage, it avoids disputes and conflict between the two spouses regarding how their finances will be divided should their marriage break down, leading to a less stressful divorce and a more amicable relationship moving forward.
Do you need help to create a binding financial agreement after separation?
Get in touch with our family lawyers in Perth today for a confidential discussion about how we can help you create a binding financial agreement after separation.