When you enter into a long-term relationship, it can have a dramatic impact on your personal wealth. Put simply, the default position is that your partner will become entitled to an increasing share of your assets and income, the longer you are together.
While you may want to fully commit to someone emotionally, this doesn’t mean you need to fully commit to them financially. The law gives you a choice. You can decide how much of your wealth you become obliged to share. You can limit this through a Binding Financial Agreement (a ‘BFA’ or ‘pre-nup’). A BFA enables you to agree upfront about who gets what, and avoid costly disputes down the track.
For a confidential chat about what’s involved in putting in place a Binding Financial Agreement, call us on 1300 654 590 or email us.
If you are contemplating marriage, considering commencing a de facto relationship or are currently in a relationship, a BFA allows you to make decisions ahead of time and (in most cases) avoid a costly legal dispute later on. It puts you in the driver’s seat and gives you a sense of control and certainty about the future.
A BFA can also help to avoid arguments and suspicion between you and your partner about money, because you have the discussions upfront. The BFA process is a very good way to ascertain the expectations and intentions of a couple regarding their finances and, in particular, how their assets would be split if they separate.
A BFA can also help to prevent family infighting between your partner and your children, or your partner and your parents. This is particularly the case if a family member has lent you money and wants to ensure that you solely retain the benefit of those funds if your relationship status changes.
If you have recently ended a relationship and are considering your options for finalising your financial relationship with your partner, a BFA offers greater privacy and flexibility. This is because a BFA does not involve the Court, and therefore can avoid costs and public disclosures. And the terms of a BFA do not need to be considered ‘fair’, which makes it more flexible than consent orders in the Family Court.
BFAs are useful and appropriate in many circumstances, particularly given that we are increasingly seeing more people with significant wealth, people marrying at an older age, and more blended families.
BFAs are particularly useful if you:
To learn more about putting in place a BFA, call us on 1300 654 590 or email us.
A BFA can deal with all aspects of the financial matters and financial relationship of the parties to the agreement, including:
A BFA does not have to deal with all of the couple’s property. A couple can decide to limit a BFA to certain assets, with the remaining assets being dealt with under the Family Law Act 1975 (Cth) (‘the Family Law Act’). For many couples contemplating marriage, this is often preferable is they only wish to protect certain assets (perhaps assets they have been gifted or loaned by their family) rather than quarantining everything from their future spouse.
A BFA can only cover financial matters. This means that it cannot cover parenting arrangements (i.e. which parent a child lives with, visitation rights, etc), and will be void to the extent that they attempt to cover those sort of matters. Child support payments and matters relating to the financial care of children also cannot be dealt with through a BFA.
Further, a BFA cannot deal with any property or financial resources that are acquired after the relationship has ended. It can only apply to the property and resources owned at the date the agreement is made, or that is later acquired during the course of the relationship.
A BFA can be entered into either before, during or after a marriage or de facto relationship. There are different sections of the Family Law Act that deal with each of the different scenarios.
There are a number of requirements that must be met for a BFA to be binding, including:
Both parties must make a full disclosure of all of their assets prior to entering into a BFA, and BFAs usually contain a schedule of assets and liabilities of the parties to record what was disclosed. Non-disclosure or inadequate disclosure can be grounds to void a BFA.
Yes. BFAs are complex legal documents and must strictly comply with the legislation. They may also be overturned in the future if they are not prepared correctly.
While you can draft your own agreement (which we generally do not recommend), each party will still need to engage their own lawyer to provide independent legal advice about the agreement and sign the lawyer’s certificate of advice. As such, it is often more efficient and cost-effective to get the lawyers involved at the outset.
If you would like to speak to someone about putting in place a BFA, call us on 1300 654 590 or email us.
A BFA can be challenged on a number of grounds. However, the presumption will start with the BFA being binding on the parties, unless valid grounds for challenge can be raised by one of the parties. Most of the grounds for challenge are set out in the Family Law Act.
If a BFA does not comply with the statutory requirements, it can be challenged as being invalid. However, the Court still has the power to order that a BFA is nonetheless binding if it has been signed by the parties and it would be unjust if the agreement was not binding.
A BFA may only be set aside by an order of the Court. Generally, the Court may only set aside a BFA if:
A BFA is a contract. Therefore, the common law grounds for challenging contracts are also applicable to BFAs, including for example for lack of certainty, mistake, duress, etc. Many of these common law grounds are also incorporated into the Family Law Act.
To make sure you’ve done whatever you can to ensure your BFA is cannot be challenged, call us on 1300 654 590 or email us.
If a couple (either married or de facto) do not have a BFA, then there are essentially three options to resolve their financial relationship when they separate:
If the parties agree how to divide their property and the settlement is fair they can complete an application for consent orders. The proposed consent orders are then reviewed by the Court and will be rejected if the Court considers that they are not “fair, just and equitable”. If the Court accepts the proposed orders, it will make the orders and return a sealed copy of the orders to the parties.
Where there is no BFA and the parties cannot agree on how to divide the property, one of the parties must apply to the Court for it to determine orders for a property settlement and spousal maintenance under the Family Law Act.
For de facto partners, there is an additional eligibility test that they must satisfy before they have recourse to property settlement orders under the Family Law Act. There are four alternative tests – the most common of these are that that de facto relationship has been in existence for at least two years (either consecutively or cumulatively) or that there is a child of the de facto relationship. This means that if a couple has been in a de facto relationship for less than two years and do not have a BFA, then they will not have any recourse to a property settlement.
Where the Family Law Act applies (i.e. when a couple had recourse to the Court for orders), there is then a four-pronged process employed by the Court to determine what orders to make:
Aside from a property settlement, a party to a marriage or de facto relationship also has a right to receive reasonable spousal maintenance from their partner if they are unable to adequately support themselves. In making orders for spousal maintenance, the Court will consider a wide range of factors including the age and health of the parties, their income, their assets, their employment prospects, and their childcare responsibilities. The Court also has to consider whether the respondent to the claim for spousal maintenance has the capacity to make payment.
As a general rule, parties must apply to the Court within 12 months from the finalisation of their divorce or within 24 months from the end of their de facto relationship.
If you are considering entering into a BFA, then this should be discussed with your partner as early as possible. The decision about whether to enter into a BFA can be intimidating and emotionally-fraught, so the parties must approach their discussions sensitively and in good faith.
If you decide that a BFA is right for you, you and your partner must each engage a lawyer to work with you through the process of putting a BFA in place.
If you would like to speak to someone about putting in place a BFA, call us on 1300 654 590 or email us.
We want to be part of your team over the long term. We'll achieve this by sticking closely to the following principles:
We measure our success on how efficiently we have facilitated your objectives, enhanced your relationships, and reduced the level of stress for all involved.
If we sound like people you can work with, call us now on 1300 654 590 and speak directly with a great lawyer.
Imagine this: You’ve carefully made your Will, making sure your loved ones will be taken care of when you’re gone. You’ve left a generous gift to your son, Jake. But then, something unexpected happens—Jake passes away before you do.
With the coming of a new year come new ideas, plans and goals. Sometimes these may come about because of a change in circumstances and needs. In other cases, these may be a necessary undertaking due to a change in law, regulation or requirements. Here are some legal issues that we think will be hot issues in 2025 and our tips to help you navigate them.
Does your Will need an update following the changes to the Succession Act 2023 (South Australia) commenced operation in South Australia on 1 January 2025?
What a year! Those of you that have been keeping up with us this year will know that 2024 was a...
Christmas isn’t always a time of joy for families. Sometimes, along with all the dishes, you are...