Benefits of a BFA in NSW

Every relationship is unique and the tips and tricks to make it work and last are not one-size-fits-all. Therefore, each relationship is possible and bound to end. Unfortunate as it may seem, coping with a separation can be tough. But have you ever stopped to consider the financial or legal implications of a separation and break-up?

In a relationship breakdown, the smart move is to have a Binding Financial Agreement (BFA) at hand. While it may seem complex, there are several benefits of entering into a BFA in NSW.

What is a Binding Financial Agreement and How Does it Work?

A BFA is an agreement, contract, or legal document between two parties. It is made under the provisions outlined in the Family Law Act 1975—Part VIIIA for marriages and Division 4 of Part VIIIAB for de facto relationships. The Act applies to all States and Territories of Australia except (in part) in the case of Western Australia.

BFAs define where the assets will go when a couple, whether heterosexual or of the same sex, decides to separate. However, it is also possible that a BFA may deal only with certain issues concerning spousal or de facto maintenance. A BFA can also cover the following:

Personal assets
Business assets
Superannuation
Financial and tax liabilities
Inheritance, trust property, and spousal maintenance

When to Enter into a BFA in NSW?

There is always a stigma surrounding BFAs and the assurance of entering one will never be a bit of a judgment. When it comes to finding the perfect time to enter into a BFA, the good news is that you can enter at any point in your relationship. It does not matter whether you enter before, during, or even after. With this in mind, here are some agreement types that you might want to consider:

Cohabitation Agreement – for de facto couples or partners who are planning to live together as a de facto couple;
Pre-nuptial Agreement – intended for couples that are planning to get married;
Post-nuptial Agreement – for couples who are already married; and
Separation Agreement – intended for couples who have decided to end the relationship and separate.

Sections to Guide You

A BFA allows affected parties to resolve disputes in a relatively quick and cost effective and non-adversarial manner. But of course, this will only be possible if the agreement is binding and certain pre-requisites are met.

A financial agreement is considered binding if all the technical requirements outlined in the relevant sections of the Family Law Act 1975 (Cth) have been fully satisfied and met. You can refer to the following sections for reference:

Section 90B – before marriage;
Section 90UB – before de facto relationship;
Section 90C – during the marriage (before separation);
Section 90UC – during the de facto relationship;
Section 90C – during the marriage but after separation (before divorce);
Section 90UD – after the breakdown of the de facto relationship; and
Section 90D – after divorce.

Entering into a BFA requires a mutual decision for you and your partner/spouse to protect both your welfare and interests. In addition, you and your partner/spouse, should both satisfy the terms laid down in the agreement.

A BFA that is valid and observes the technical requirements necessary, can also have the effect of ousting the jurisdiction of the Court. This paves the way for any couple to not attend court matters, which can be a source of distress and an expensive route to take.

Benefits of Entering Into a BFA in NSW

For many, a BFA is a document only for the rich. Some consider it an outlet to end financial ties in a relationship, or a tedious and intimidating process to go through. At VC Lawyers, we will provide you with a sense of clarity and ease when considering entering into a financial agreement and the benefits of a BFA in NSW.

Protection

One of the prime benefits of entering into a BFA in NSW is to have protection. This is usually the case when one of the parties to the relationship or marriage has more assets and funds than the other.

A BFA can exist to serve as protection for your assets and what is important to you. It can also be quite beneficial when one is earning more than the other. BFAs also help if one or each party has brought in his/her own separate assets or resources into the relationship or marriage, which each seeks to protect.

A BFA also allows you and your partner/spouse to agree on an acceptable division of assets. This can also be the case when later, one of the parties is entitled to a large gift or inheritance, redundancy or winning. A BFA is also reliable even in cases of managing a family business or investment.

Transparency

In addition, BFAs also provide transparency as it requires both parties to commit to full disclosure. Making a full and frank disclosure is an imperative pre-condition before entering into a BFA. Moreover, it gives both you and your partner/spouse a sense of openness, and honesty as per the financial position in the relationship.

When these are in place, the BFA can offer opportunities to establish the terms outlined in such an agreement. More importantly, it enables both parties to consider all the possibilities they may encounter if the relationship fails. Hence, they can arrive at making informed decisions when full disclosure is made as to the true financial resources and liabilities of the parties.

Practicality

Another benefit of a BFA in NSW is the practicality it can offer both parties. The pain from separation and the ending of the relationship cannot always be eliminated. However, BFAs allow the cost associated with legal disputes regarding the division of matrimonial property to be reduced. Moreover, with a BFA, you and your partner/spouse can avoid any conflict that may arise.

A BFA prevents instances of letting the Court decide on the manner of asset distribution. Moreover, without both parties having to go through the stress, uncertainty, cost and time delays associated with litigation or having the Court decide.

Potential Drawbacks to Encounter

Indeed, financial agreements that are binding gives both parties a sense of freedom. Such agreements also provide both parties with certainty and control over their assets and the division of those assets and liabilities, whilst avoiding instances of future claims.

However, as applicable to any legal process, there are drawbacks that you may encounter when entering a BFA. Note that the Court can set aside any financial agreements conducted in the manner set forth in sections 90K for marriages and 90UM for de facto relationships of the Family Law Act 1975.

Where To Begin?

A BFA is an eye-opener for all the possibilities your relationship may encounter when all else fails and it has ended. Moreover, in today’s fast-paced world, being equipped and ready is the wise decision to make. As intimidating as it may seem, here are a few tips to keep in mind when deciding to enter into a BFA:

It needs to be in writing and signed by both parties in the relationship of their own free will;
Each party must have received independent legal advice from his/her own separate solicitor as to the terms of and the advantages and disadvantages of the proposed agreement before signing the agreement;
The legal practitioner must provide a signed statement confirming the provision of such independent legal advice and a copy of which will be provided to the other party;
Each party must make a full and frank disclosure of his/her true financial position and circumstances.

Remember, these are only simple tips. The best way to successfully go through this complex process is by seeking legal advice on this matter.

Get an Enforceable BFA in NSW

Yes, some might think that a relationship can end peacefully. However, we can never discount the possibility that it may end acrimoniously given that emotions and money are involved. Moreover, for the sake of your peace of mind and the emotional impact this may have on you, and considering also how other people, like your children, family, and friends may be affected, you may have greater peace of mind by entering into a BFA.

Situations like this can be complex and daunting. Hence, it is better to seek independent legal advice in respect to the drafting of the agreement. Getting the right legal advice will also provide you with an in-depth understanding of what you are about to enter and agree on. Thus, you and your partner or spouse can avoid any unforeseen and unfortunate instances.

At VC Lawyers, we will work with you hand in hand and ensure that the process is tailored to your needs. Our esteemed Family Lawyers have extensive experience in providing legal advice and preparing BFAs—no matter where you are in your relationship. More importantly, we can make your BFA enforceable, so you can maximise the benefits of a BFA in NSW.

NB: This blog post is neither a legal advice nor intended to be such, and is only for general information. The same should not also be taken as a financial or commercial advice. The reader must personally consult their professional adviser/s on the contents of this blog post. VC Lawyers is not liable for any loss or damage, direct or consequential, as a result of the reader’s or a third person’s misconstruction of the wordings or use/misuse of the contents of this blog post.