A binding financial agreement (BFA) is a legal document that can be made between two parties before or during marriage or de facto relationships. The purpose of these agreements is to set out how property, assets, and debts should be divided if the relationship breaks down.
Many couples opt to make a BFA to protect their assets. This is particularly common in cases where one party is entering the relationship with significant assets. For example, if one party owns a business and wants to ensure that it remains wholly theirs in the event of a separation, a BFA can be an effective way of achieving this.
The terms of a BFA can vary significantly, and it is essential that both parties seek legal advice before entering into such an agreement. The document must be signed voluntarily and with a full understanding of its terms and implications.
A BFA can also be used to govern financial arrangements during the relationship. For instance, it can set out how bills are paid, whether joint accounts are established, and how debts are handled.
Importantly, BFAs are an effective way of reducing the stress and costs associated with separation. In the absence of a BFA, property division and financial arrangements will be made through the court system, which can be both expensive and time-consuming.
It is worth noting that a BFA can be set aside by a court in certain circumstances. For instance, if one party can demonstrate that they did not fully understand the terms of the agreement, or if the agreement is deemed to be unfair.
In summary, a binding financial agreement can be an effective way of protecting assets and reducing the stress and cost associated with separation. If you are considering making a BFA, it is critical that you seek legal advice to ensure that the agreement is valid, fair, and provides the protection you require.