Binding Financial Agreements in De facto relationships
If you are in a de facto relationship and cohabitating with your partner, entering into Binding Financial Agreements is the only protection you can have ahead of time to safeguard the assets you “walked” into the relationship with.
This is particularly important if there is a large difference between your financial position and your partner’s financial position.
A Binding Financial Agreement during a de facto relationship, therefore, sets out how the property pool will be divided in the unfortunate event that the relationship breaks down.
These Agreements are expensive and complicated legal documents that effectively attempt to oust the jurisdiction of the Federal Circuit and Family Court of Australia to deal with the property settlement if separation occurs.
However, there are a number of potential issues to be wary of in the drafting of any Binding Financial Agreement to ensure that the agreement is legally binding and has a low chance of being successfully set aside by a party.
Those potential issues are summarised below:
1. Failure to disclose – Failing to disclose your true financial position in a Binding Financial Agreement can lead to it being ultimately set aside by the Court. This could be failing to declare your true income, failing to include an asset, or failing to disclose a liability.
2. Duress – Duress can be a common ground to apply to overturn a Binding Financial Agreement. A duress case may be argued if a party has made a threat to the other party with regard to the Agreement (i.e. “sign this Agreement before we get married or the wedding is off”) such that a party has been coerced into signing the Agreement.
3. Improper legal advice – A requirement for a Binding Financial Agreement is that both parties have received independent legal advice from a solicitor as to the effect of the Agreement on their rights and the advantages and disadvantages of entering into such an Agreement.
This legal advice must be provided before the Agreement is signed so that the party can decide whether they wish to proceed with the Agreement. Cases have been litigated where a solicitor has failed to provide proper written advice to a party on a Binding Financial Agreement.
This can be the case with “cheap” Agreements – be wary of a solicitor’s fee for a Binding Financial Agreement if it is unusually low!
4. Failure to adhere to the legislative requirements – Binding Financial Agreements have strict legislative guidelines which must be adhered to in the drafting of the Agreement. A failure to follow these rules can give a party a potential ground to attempt to set aside the Agreement.
5. Unenforceable or void – the terms of Binding Financial Agreements must be enforceable and comply with the relevant provisions of the Family Law Act 1975 (Cth). A failure to do so could lead to the Agreement being set aside. For example, if there is a mistake in the Agreement, a breach of the Agreement or unconscionable conduct on behalf of one of the parties.
So whilst a Binding Financial Agreement offers you the best protection in a de facto relationship, it is essentially the only protection you can have to protect your assets.
No solicitor can ever advise you or guarantee you that these Agreements are 100% watertight. They are, however, the best protection under the Family Law Act you can get and if everything is done properly by your lawyer then it is very rare and difficult for a party to have one overturned (not to mention costly).
Need Legal Help?
If you are considering entering into Binding Financial Agreements or wish to obtain advice as to whether you can set aside an agreement you may have already signed, please contact the Brisbane family lawyers team at James Noble Law for a free 20-minute consultation with one of our highly experienced family law solicitors today.
Find Brisbane family lawyers on Google Maps near you.
You may also like to know more information about the
- How To create Airtight Binding Financial Agreements? How Tight Is An Airtight BFA?
- Binding Financial Agreements: Are they worth the paper they are written on?
- Binding Financial Agreements & Will Drafting Essentials You Really Should Know About.
- Why Smart People Agree On Binding Financial Agreements Before Settling Down?
- Limited or Binding Child Support Agreement – Which Should You Choose?
- Superannuation Legislation: Protecting your financial interests under Family Law.
- Financial Settlement, Debt, and Home Loans. More Money. More Problems.
- Binding Financial Agreement & Provisions of Family Law Act.