TYPES OF BINDING FINANCIAL AGREEMENTS (BFAs)
Under the Family Law Act 1975 (Cth) (Family Law Act), Binding Financial Agreements (BFA) are divided into several categories – those relating to marriages and those relating to de facto relationships.
Section 90B: Part VIIIA agreement – before marriage;
Section 90C: Part VIIIA agreement – during marriage;
Section 90D: Part VIIIA agreement – after divorce order;
De Facto Relationship
Section 90UB: Part VIIIAB agreement – before de facto relationship;
Section 90UC: Part VIIIAB agreement – during de facto relationship;
Section 90UD: Part VIIIAB agreement – after the breakdown of a de facto relationship.
Section 4AA of the Family Law Act specifically defines 'de facto relationship'. Broadly speaking, a de facto relationship is two people of different or the same sex who "have a relationship as a couple living together on a genuine domestic basis". A couple in a de facto relationship is expressly not married to each other.
Section 90G (Marriage) and Section 90UJ (De Facto) set out when a Binding Financial Agreement is binding, namely when:
- All parties sign the agreement;
- Before signing, each party was provided with independent legal advice (about the effect of the BFA and its advantages and disadvantages);
- Each party obtained a signed certificate stating they had received legal advice, and subsequently provided this certificate to the other party;
- A court has not terminated or set aside the agreement.
Section 90B states that this type of BFA would not be effective until parties are married, and this marriage breaks down. Similarly, section 90UJ says that a de facto BFA would cease to be effective once the parties marry.
WHEN SHOULD YOU CONSIDER A BFA
Clients should consider BFAs in the following circumstances:
- When parties are about to commence a de facto relationship or become married and there is a difference in the value of the assets that they are bringing into the relationship.
- When parties are about to commence a de facto relationship or become married and both parties have significant assets that they wish to protect for their children from a previous relationship
- When parties are in a de facto relationship or married and wish to have a binding agreement in place to protect each other in the circumstances that they separate
- When parties have separated or divorced and they wish to formalise an agreement in relation to the division of their assets.
A BFA can only be prepared with the agreement of each party and each party must obtain independent legal advice from a solicitor prior to signing the Agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.