It is with regularity that family lawyers are buttonholed at social events to provide some impromptu advice to someone going through a property division.What is consistent through these conversations is how little many people understand of the process, how much people cobble together their own solutions based on what is ‘fair’, and how infrequently lawyers are consulted at an early stage to provide some guidance and frameworks for discussions between parties.
 
I can recall a matter that was brought to me where the parties had been spending an inordinate amount of time dividing and ascribing value to each and every item of furniture or household appliance and dividing these in a way that was reflective with their respective incomes; but had no idea that they might be entitled to some of each others’ superannuation, a significant oversight that would have resulted in one party missing out on almost $100,000 of superannuation.
 
So what is the broad overview of the process that family lawyers will apply?

1. Identify your assets, liabilities and superannuation as at present. This is commonly called the ‘asset pool’
2. Identify what contributions were made into the relationship, including both financial and non-financial contributions. This will mean knowing what you had at the beginning, what you had at the end, and how you got between those points.
3. Identify what your and your partner’s future needs are – whether they relate to income disparity, care of children, ill-health and medical costs, or your age.
4. Determine whether it is just and equitable to proceed with any alteration of your existing legal rights at all, as well as whether the final result as determined by the above 3 steps results in an outcome that is just and equitable and also practical.

These steps are simple in some senses but as with everything, the devil is in the detail of the implementation and the ‘edge cases’.

Consulting a family lawyer early for guidance to inform your discussions, identify any problematic issues and define your expectations is one of the most sensible investments of your money post separation you can make.

Parties can enter into a BFA before marriage (s 90B), during the marriage (s 90c), after a divorce (s 90D), before entering into a de facto relationship (s 90UB), during a de facto relationship (S 90UC) or after the breakdown of a de facto relationship (s 90 UD). Both heterosexual and same-sex (LGBT) couples can enter into a BFA.

A Binding Financial Agreement (or BFA) is a written document signed by both parties to a relationship which contains provisions about the division of property in the event of a separation. It must comply with either Part VIIIA or Part VIIIAB of the Family Law Act 1975 and parties to the Agreement must obtain independent legal advice about the Agreement.

A Binding Financial Agreement is often referred to as Prenuptial Agreement (prenup or prenups), Cohabitation Agreement, Postnuptial Agreement (postnup or postnups), Property Settlement Agreement or Divorce Settlement Agreement.

Binding Financial Agreements entered into prior to or during a Marriage or De Facto Relationship

Advantages

1. It allows parties to protect assets and financial resources which existed prior to the relationship from a claim for division after separation.
2. It allows parties to protect an inheritance or gift they received prior to the relationship, during the relationship or after separation.
3. In some circumstances, it allows parties to remove their respective responsibilities towards the other to provide spousal maintenance.
4. It provides a degree of certainty to the parties as to how their assets, financial resources and liabilities will be treated in the event they separate and remove any anxieties they may have about entering into a relationship in the first place.
5. It allows parties to be clear about the responsibility of debts such as credit card debts, home loan, personal loans, business loans, etc.
6. In conjunction with a will, it allows parties to plan their estate and ensure that their children, especially any children from previous relationships, are not disadvantaged in the division of the estate.
7. It allows parties to determine their property settlement without the intervention of the Courts and costly legal disputes.

Examples of when a Binding Financial Agreement may be useful

1. When one party has significantly more assets and financial resources than the other, a BFA (whether entered into before or during the relationship) allows that party to keep those assets and financial resources safe from the other in the event that they separate.
2. When both parties have significant assets and financial resources and they both wish to quarantine those assets and financial resources from the other in the event that they separate.
3. When one or both parties have children from previous relationships and wish to protect all or part of their assets and financial resources for their children.

Binding Financial Agreements entered into after separation

Advantages

1. It allows parties to keep the terms of their settlement agreement away from the eyes of the Courts, the Australian Taxation Office (ATO) and other persons and organizations.
2. It allows the parties more flexibility in how they wish to determine their financial matters.
3. In some circumstances, it allows parties to remove their respective responsibilities towards the other to provide spousal maintenance.

Examples of when a Binding Financial Agreement may be useful

1. When parties have complex property, business or trust arrangements which they wish to keep as private as possible.
2. When the settlement terms are more in favour of one party and as a result may not be approved by a Court.
3. When the parties need a quick resolution to their financial affairs and wish to avoid an agreement which requires the review and approval of a Court (consent orders).

We have a competent and approachable team of family lawyers who is able to assist you in determining the right kind of Binding Financial Agreement for your circumstances.