A binding financial agreement, also known as a BFA, is a legal document that outlines and formalizes the financial arrangements between separating spouses or de facto partners. It is a private agreement that can be made before, during or after a relationship ends. The agreement sets out how each party`s assets, liabilities, and superannuation will be divided, as well as how spousal maintenance will be paid.
The purpose of a BFA is to provide certainty and clarity for both parties in regards to their financial obligations. By having a legally binding agreement in place, it can help avoid costly and time-consuming court proceedings in the event of a dispute. It also allows both parties to retain control over their financial affairs, rather than leaving it in the hands of the family court.
If you are considering a BFA, it is important to seek legal advice from a qualified family lawyer. They can guide you through the process and ensure that the agreement is fair and legally enforceable. Each party must also have independent legal advice for the agreement to be valid.
It is important to note that a BFA is only applicable to financial matters. It cannot be used to decide issues relating to child custody or parenting arrangements. These matters must be decided by the family court or via an alternative dispute resolution process such as mediation.
Once a BFA is in place, it is important to review it regularly to ensure it still meets the needs of both parties. Changes in circumstances, such as the birth of a child or a significant increase in income, can affect the terms of the agreement. It is recommended that a BFA be reviewed every two to three years or whenever there is a major change in circumstances.
In summary, a binding financial agreement is a valuable tool for separating couples to formalize their financial arrangements in a legally binding document. It provides certainty and control over financial affairs and can help avoid costly legal proceedings. However, it is important to seek legal advice and review the agreement regularly to ensure it is fair and up to date.