If you are living with someone or intending to live with someone, or you intend to get married or are already married, then you may wish to consider using our Binding Financial Agreements Plus preparation services, which can help ensure you will get your BFA certified.
Also called prenuptial agreements or de facto agreements, Binding Financial Agreements (BFA) can help you protect yourself against a possible claim on your assets in the event of separation at some time in the future. Moreover, BFAs are fully enforceable in the Federal Circuit and Family Court of Australia and may be signed before or after you move in together, or before or after you get married, and apply equally to same-sex couples.
BFAs are also commonly used by couples who have separated. If you have reached an agreement on how your assets and liabilities are to be divided, then you can formally document your agreement through a Separation Binding Financial Agreement (BSA). Also called binding separation agreement, a Separation BFA is essential if you need to split superannuation, transfer real estate and refinance mortgages.
For these agreements to be legally binding and enforceable in the Courts, the parties must:
The job of the certifying lawyers is not straightforward.
Many people comment that they have agreed on the terms and all they want the lawyers to do is ‘sign-off’ or ‘rubber-stamp’ the binding financial agreement.
Both certifying lawyers (1 for each party) must issue a 1-page Statement (which is then attached to the agreement before signing. This applies to BFAs and BSAs (binding separation agreements). The certificates are also accompanied by a detailed letter of advice setting out the points discussed and the reasons for the advice.
Each certificate must address the following for each party:
In order for the certifying lawyers to be comfortable signing these certificates, there are a number of factors to be considered.
 All certifying lawyers will expect the parties to the financial agreement to make a full disclosure of all their assets and liabilities. This includes all assets and liabilities held outside Australia, even though the jurisdiction of the agreement is under Australian law and therefore covers assets and liabilities in Australia.
In order for the parties to make an informed decision on moving forward with the agreement, they must be able to see the full financial position of the other party. The advising lawyers must also be able to see the full financial position of both parties.
In most cases, the solicitors will ask for copies of the front pages of bank statements, super fund statements, rates notices, investment accounts and mortgage accounts. This is for both parties. This information need only be in summary form rather than full statements.
This information will reveal if 1 party is financially dominant over the other party, and if the agreement is fair and equitable for both parties.
Key factors that the advising and certifying lawyer must also consider are:
In the case of BFAs, if one party is the sole earner, it may be deemed that the weaker financial party is deemed to be financially dependent on the party with the stronger earning capacity. In such cases, allowance may need to be made for the weaker financial party in the event of separation.
With binding separation agreements, the disparity in earning capacity may lead to a short-term adjustment (maintenance) for one (1) to two (2) years, to allow the weaker financial party to train to get back into the workforce.
With BSAs, if either party has chronic medium or long-term health issues, then the advising lawyers must ensure that there is adequate compensation for that party’s future medical expenses, and also compensation if that party has a diminished capacity to earn in the future.
In the case of BFAs, if the parties to the agreement have children after signing the BFA, then consideration must be given to the effect of the enforcement of the BFA on the welfare of the children. In some cases, the lawyers will require that the BFA terminate if the parties have children after signing the BFA. At the very least, the parties need to re-consider the terms of the BFA if they have children, to be sure the BFA is not terminated or set aside by a Court at a later date.
With BFAs, the lawyers must determine if the proposed BFA is fair and equitable to both parties. This is the key test. This can only be done after all the above is considered by the advising lawyers.
The lawyers are increasingly strict about the above issues because they need to ensure that there is little, or no prospect of the agreement being challenged in Court at any time in the future. Clearly, this is much more of an issue for BFAs and much less so for BSAs.
If there is a challenge in the future by one or the other party, the party who is bringing the challenge needs to demonstrate why the agreement is unfair, and therefore should be set aside or the terms varied by the Court.
As part of the challenge process, the Court will review the legal advice provided by the certifying lawyers. If the challenge is successful, the affected party may file a claim for compensation from the lawyer’s professional indemnity insurance provider.
Whether the claim is successful or not, the process is very stressful and time-consuming for everyone involved.
In advising the parties and issuing the certificates, the advising lawyers will undertake a rigorous process to ensure that the parties and themselves are protected from future litigation.
AussieLegal offers a range of family law services, including the preparation of BFAs and BSAs. We have a DIY Binding Financial Agreement and a DIY Binding Separation Agreement, which enables you to prepare your own financial agreement and separation agreement, respectively.
However, both documents do not include legal advice and guidance from a lawyer and certification necessary to meet the Court requirements for the agreement to be binding on the parties. To ensure you can get your BFA or BSA certified, you may want to consider our Binding Financial Agreement Plus service or Binding Separation Agreement Plus service.
Call us on 1300 728 200 to discuss your situation with one of our consultants.
