A Binding Financial Agreement (“BFA”) is a legally binding contract that a couple can make that sets out how their assets and liabilities are to be divided in the event of a separation.
A couple can enter into a BFA either before, during or after a marriage or de facto relationship in accordance with the Family Law Act 1975 (Cth) (“FLA”) or the Family Court Act 1997 (WA) (“FCA”) for married and de facto partners respectively.
What can a BFA cover?
BFAs cover the division of your property, assets and liabilities.
In Western Australia, this includes superannuation for married couples but not de facto partners. You can also make provisions about spousal maintenance payments.
BFAs in Western Australia cannot make provisions with respect to child support arrangements or parenting-related matters.
These are dealt with separately, either via a Child Support Agreement or child support assessment by Services Australia, or via a Parenting Plan or the filing of Consent Orders in the Family Court.
What makes a BFA binding?
For a BFA to be binding, each party must first receive independent legal advice (i.e., from separate lawyers) about how the BFA affects their rights, and the advantages and disadvantages of making the BFA.
There area number of circumstances in which a BFA can be set aside by the Family Court, such as if the agreement was obtained by fraud, the BFA is void, voidable or unenforceable, or it’s impossible for the arrangements in the BFA to be carried out.
What happens if I haven’t made a BFA and we separate?
You and your partner are still able to make a BFA after you separate to formalise the way you are dividing your assets.
An alternative to entering into a BFA is to file an Application for Consent Orders in the Family Court of WA.
However, the Family Court is bound to make decisions that are “just and equitable”, which may not necessarily align with the way you and your ex would like your asset pool to be divided.
Should I get a BFA?
What’s important to keep in mind when you’re thinking about making a BFA is that you give up some of your rights when you enter one. You won’t be able to apply to the Family Court to have your assets divided, and a BFA can only be terminated by making a new BFA or a separate termination agreement.
You can still apply to the Family Court if your ex breaches the terms of the BFA, or if you are looking to have the BFA set aside for one of the reasons mentioned above, but unless the BFA is terminated or set aside, it can limit the flexibility of your arrangements in the future.
On the other hand, going through the Family Court can be a costly and time-consuming process that is emotionally and financially draining for everyone involved.
If you’ve previously had to go through the Family Court in a separation, making a BFA going into your new relationship might give you some peace of mind knowing that it is less likely to happen again.
If you want to discuss whether making a BFA is the right choice for you, our team can advise you on your options. Please feel free to contact us on (08) 9305 9529.