Binding Financial Agreements (“BFAs”) are not useful for every couple. If neither you nor your partner have any significant assets, there is little value in having a BFA drafted. There are, however, several situations where a Binding Financial Agreement may be useful. These have been set out below.
You come from a wealthy family
Are you a daughter from a wealthy family? If so, you may want to enter into a BFA with your partner to prevent any potential claims against your family’s estate. A BFA can account for this scenario by including a provision that stipulates shared property as that which is jointly registered by you and your partner, excluding all other assets that are owned by just one party to the relationship. A BFA can also help ensure that all inheritances given to you from your family cannot be claimed after the breakdown of the relationship, and that the only assets which are to be divided are those which were jointly acquired prior to separation.
You own your own property
Do you have your own apartment? Did your ex-husband leave you a nice house? If you have your own land (or any other property) that you either acquired on your own or was left to you by someone else, and you have concerns that your current partner may be able to claim it in the event that you were to split up, you should consider entering into a BFA. If you do split up, while the courts may not necessarily divide the property half-half, a BFA would eliminate any uncertainties. Your BFA can be drafted with specific provisions stating that any land or property that you own, prior to the commencement of your current relationship, remains yours if the relationship ends. This means that if you’re living together, your partner has no rights to the property and will be required to leave.
You have children from a previous relationship
Do you have young children from your previous relationship? If you are entering into a new relationship with young children from a previous relationship, it would be quite natural to be concerned about their wellbeing if anything was to happen to you. In these cases, a BFA could be very helpful to you. BFAs can be drafted in a way which protects the estate of the deceased partner from any claim of the surviving partner, providing you with the comfort of knowing that your estate will be left to your children, subject of course to any applicable laws dealing with wills and estates.
You have your own business
Are you a married business owner? If so, you may be looking to protect the assets of your business/company, and a BFA can help achieve this. If you and your partner split up, without any sort of written agreement in place, the courts may require that certain assets and business activities be suspended so that the parties are able to adequately calculate their assets and liabilities, and the courts will, using their discretion, divide such assets and liabilities in an equitable manner. Having a BFA which clearly sets out each party’s assets and liabilities, in most instances, would help avoid any expensive inquiries into the finances of either party, and removes any uncertainty as to the disbursement of personal and business wealth in the event of separation.
You have a lot more than your partner does
Are you a successful professional in a relationship with someone younger, less successful, and more careless with money? If so, then you may want to protect your existing assets. If you and your partner both agree, you can have a BFA prepared which specifically states that any assets owned prior to the relationship will not be divided in the event that you were to split up. On top of that, the BFA can state that only assets which were jointly acquired during the relationship will be considered in the division of assets in the event that the relationship ends, and any assets which were acquired by only one party, or any inheritance given to either party, can be excluded.
There are many instances in which a BFA could be of great value. Whether you’re concerned about the interests of the children of a relationship, or simply wanting more protection over your assets, a BFA can certainly provide more certainty.
Contact LegalVision today on 1300 544 755, and speak with one of our family lawyers. We would be happy to answer all your questions on how a BFA works and whether it would work for you.