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1. Are BFAs Binding? 

A binding financial agreement (BFA) is not a court order. It is an agreement governed by national legislation, the Family Law Act 1975 (Cth). BFAs can be set aside by a court if the guidelines set out in the Act are not followed. A BFA is therefore binding, but only if: 

  1. the parties give full financial disclosure, including details of all earnings, assets, financial resources and debts;
  2. the agreement is in writing and signed by both parties; 
  3. it includes a statement from each party that before signing the agreement each party received legal advice on their rights and the advantages and disadvantages of entering the agreement; 
  4. before or after signing the agreement the party received a signed statement by a legal practitioner certifying the advice regarding the parties’ rights and advantages and disadvantages of entering the agreement was given; 
  5. a copy of the legal practitioner’s statement is given to the other party or a legal representative of the other party; 
  6. the agreement has not been terminated or set aside by a court; and
  7. the agreement is not liable to be set aside for any other reason, as explored below. 

2. When Can a BFA Be Set Aside?

The court can set aside a BFA in a number of circumstances, including if: 

  1. either party to the agreement  fails to give full financial disclosure, such as omitting details of an asset, interest in a trust or real estate valuation; 
  2. the performance of the BFA is impracticable due to circumstances that have arisen after a party has entered the BFA. For example, after the birth of a child or children, noting the court will always regard the interests of those children as paramount; 
  3. either party engaged in unconscionable conduct in relation to the making of the BFA (which can include non-disclosure of assets); and/or 
  4. if the agreement is uncertain or incomplete. 

3. What Property Do I Have to Disclose? 

When preparing a BFA, you should disclose: 

  1. as a general rule, any property worth $5000 or more, including vehicles, household furnishings, jewellery and artwork;
  2. real estate you own, including overseas real estate;
  3. cash or funds held in bank accounts; 
  4. property held by a company ultimately controlled by you for your benefit; 
  5. property held on trust by a third party for your benefit; 
  6. interest and/or shares in any company. 

Of course, you also need to disclose liabilities. This would include: 

  1. mortgages or personal loans; 
  2. credit card debt;  
  3. HECS debts or similar. 

4. Can I Limit the BFA to Certain Property Only? 

Technically, there is nothing to prevent limiting the BFA to certain property under the Act. However, given the issues it raises with disclosure, lawyers are often hesitant to do so as the agreement is more likely to be rendered void.

5. Do BFAs Cover Same-Sex Couples?

BFAs do cover same-sex couples. The Family Law Act 1975 (Cth) allows married couples and de facto partners, including same-sex couples, to make these agreements, without any distinction between them. 

6. What Determines a De-Facto Relationship?

There is no single test (such as living together for two years) that determines a de facto relationship. Instead, the court considers whether a range of factors to determine if the couple is living together on a genuine domestic basis. These factors include: 

  1. the duration of the relationship
  2. the nature and extent of your common residence; 
  3. whether a sexual relationship exists; and
  4. the degree of financial interdependence.

They also consider the ownership and use of the property, the care and support of children, and the reputation and public aspects of the relationship. 

7. What Is the Difference Between a Consent Order and a BFA?

A BFA is a contract between two parties to a marriage or de facto relationship. A consent order is an order made by the court that confirms an agreement made between parties, as determined by the court. To obtain a consent order, parties must make an application to the court setting out the orders they request and give detailed information. This includes details of all assets, debts, income, expenses and details related to children. The court will make the consent orders when satisfied the orders are just and equitable. Some key differences between BFAs and consent orders include: 

  1. consent orders can include orders relating to care and maintenance of children, as well as financial matters, while BFAs can not; 
  2. both parties do not need to be legally represented to enter into consent orders; 
  3. there are some limits on when consent orders can be filed. For example, they can not be filed prior to a wedding, when parties are contemplating marriage; 
  4. If the terms of a consent order are breached, an application can be made to the Court to enforce the terms of the order.   

8. What is With the $1 Payment for Spouse Maintenance? 

Presently, the legislation is somewhat ambiguous as to whether a zero dollar value can be used in a spousal maintenance agreement (i.e. it requires ‘the amount provided for’ to be specified). To avoid this ambiguity and the potential for such an agreement to be invalid by not specifying a specific amount, lawyers regularly nominate a notional amount of $1. Changes to the legislation have been proposed to reduce this ambiguity. 

9. Can We Include Provisions for Child Support?

You cannot include provisions for child support because a separate statutory body, the Child Support Agency, deals with child support. If you want to formalise an agreement, you can prepare a separate Child Support Agreement and lodge it with the Child Support Agency. 

10. Can You Explain the Family Provision Release Clause? 

This clause is quite standard, though you can, of course, exclude it if you wish. In summary, each state in Australia has laws in place than enable certain classes of people (including spouses or former spouses) to make a claim against a person’s estate even if they were not included in their will (or bequeathed a lesser amount). This is commonly referred to as a ‘family provision claim’ This clause seeks to act as an agreement between the parties so that no such claim will be made. 

11. What Happens if One Party Dies? 

A BFA will usually apply if the parties separate, or if one person dies. It is important for parties to ensure their wills are up to date and do not conflict with any terms of the BFA. Any conflict between a will and a BFA would generally need to be determined by a court, looking at the particular circumstances of the matter and each document.

12. What if I Remarry or Enter a New Relationship? 

The BFA should finalise all property arrangements between parties if they separate (after entering into a pre-relationship or during-relationship BFA), or after entering a post-separation relationship. In other words, you are free to enter a new relationship without risk of any claims by a former partner on your property. It is important to review your BFA periodically to update it if required, such as in the event of changed circumstances such as a new de facto relationship or marriage. 

13. Can BFAs Cover Blended Family Arrangements?

A BFA can cover a new relationship where you have children from a previous relationship. Many people who have been through a separation or divorce have concerns about protecting their assets and a BFA can ensure separate assets are protected from the start of the new relationship. 

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