Binding Financial Agreements in Queensland

The deterioration of a loving relationship is usually a dreaded outcome for all those involved.

In addition to the emotional toll it takes on a person, there is always the added stress of dividing up property and finances. Add on top of this a potential custodial battle for any children involved, and you have the recipe for a protracted and emotional legal battle.

To prevent some of this heartache, a couple can enter into what is called a Binding Financial Agreement or BFA.

Key Takeaways

A Binding Financial Agreement can help couples set out how assets, liabilities and other financial matters will be dealt with if the relationship later breaks down.
These agreements can be made before, during or after marriage, and can also apply to de facto relationships.
A Binding Financial Agreement may address matters such as existing assets, shared property, spousal maintenance and the effect of future changes in the relationship.
Entering into a Binding Financial Agreement can limit the parties’ ability to ask the family court to determine how property is divided.
Independent legal advice is a critical requirement, and changing or setting aside an agreement can be difficult once it has been signed.

Why should I enter into a Binding Financial Agreement?

When a couple commits to entering into a relationship, one of the main concerns that either of the parties may have is the long-term security of the finances and assets that they bring with them should the relationship fail in the future, and this is the role of a Binding Financial Agreement.

At its most basic level, a Binding Financial Agreement is a type of contract that allows the two parties involved to state their individual assets and finances, as well as their liabilities.

In the event of a breakdown in a relationship or the death of one of the parties, the agreement then allows for a smooth and ordered division of the assets of the two parties.

What kind of Binding Financial Agreement is right for me?

There are several types of Binding Financial Agreements set out under the Family Law Act 1975. They include de facto agreements, before marriage agreements (also sometimes referred to as a prenuptial agreement), during marriage agreements, and after marriage agreements.

All of these agreements can cover a huge array of a couple’s personal and financial matters, including (but not limited to):

Their individual incomes
Their current assets
Which assets are considered as shared
How many future assets will be managed
Who obtains custody of the family pets
Spousal maintenance
How future children will affect the agreement
How marriage will affect the agreement (in the case of a de facto relationship)

Even specific things such as the length of your relationship affecting certain provisions of the agreement can be used to pre-emptively shore up your financial situation in the event of a breakup. Read Separation and Divorce Faqs.

Benefits of a Binding Financial Agreement

One of the main principles of family law in Australia is that the two parties of a broken-down relationship should try their utmost to resolve a matter outside of a courtroom. This, in essence, makes a Binding Financial Agreement a way for the family courts to attempt to ensure that this principle is taken care of before the breakdown of a relationship can even begin in most cases.

However, couples need to be aware of the ramifications of these agreements before they consider entering into one themselves. Most importantly, entering into a Binding Financial Agreement means that the parties are relinquishing their right to have a family court decide how the assets of a couple are divided.

Once these agreements are entered into, it is very difficult to have them annulled outside of a provision within the agreement, or by a mutual agreement to do so by both parties.

As such, it is required by law that each individual party consult an independent lawyer for advice on an agreement before both lawyers then sign off on the document.

To cancel or change a financial agreement, you must prove:

there was a fraud (dishonesty);
the agreement is not practical to carry out (not just inconvenient);
there is a major change in the children’s care and welfare;
the other person acted in an unconscionable (unethical or unfair) way.

When to Seek Legal Advice

You may need to seek legal advice if you:

are considering signing a financial agreement or consent orders
need to change an existing financial agreement or consent orders.

Our Family Lawyers are Here to Help

If you are considering creating a Binding Financial Agreement or have any other questions regarding divorce & separation matters, please do not hesitate to contact ABKJ Lawyers on 07 5532 3199 or send us a confidential message.

Frequently Asked Questions

What is a Binding Financial Agreement?

A Binding Financial Agreement is a private legal agreement that sets out how a couple’s financial affairs may be dealt with if their relationship breaks down, or in some cases if one party dies. It can record assets, liabilities and other financial arrangements between the parties.

Can a Binding Financial Agreement be made before or during a relationship?

Yes. Binding Financial Agreements can be made at different stages of a relationship, including before marriage, during marriage, after marriage, and in de facto relationships.

What can be included in a Binding Financial Agreement?

Depending on the circumstances, a Binding Financial Agreement may address matters such as income, existing assets, shared assets, future asset management, spousal maintenance, family pets, and how certain future changes may affect the agreement.

Does signing a Binding Financial Agreement affect going to court later?

Yes. One of the key consequences of entering into a Binding Financial Agreement is that the parties may give up their right to have the family court decide how their assets should be divided.

Can a Binding Financial Agreement be changed or cancelled?

Changing or setting aside a financial agreement can be difficult. The page notes that this may require grounds such as fraud, impracticability, a major change in the children’s care and welfare, or unconscionable conduct by the other party.

Do both parties need independent legal advice?

Yes. The page states that each party must obtain independent legal advice before the lawyers sign off on the agreement, which is an important step in making the agreement legally effective.