A Binding Financial Agreement (BFA, for brevity purposes) is an agreement that establishes a system of property settlement in a marriage or de facto relationship. Sections 90B to 90KA of the Family Law Act 1975 are the provisions that should be referred to in relation to BFA in a marriage.
A BFA may be entered into before, during or after the marriage or de facto relationship. Cautious and practical persons would prefer to execute a BFA before entering a marriage or a de facto relationship. It is advantageous to enter into a BFA especially if you have more assets than the other partner. By executing a BFA, assets owned before the start of the relationship could be excluded from the pool of assets of the relationship. In the event of a separation or divorce, these excluded assets will not be included in the property settlement.
Parties are not prevented from entering into a BFA during the marriage or de facto relationship. A BFA will settle any confusion or dispute about property division and ownership. Parties do not have to go to court anymore to prove their rights over a property. Through a BFA parties have control in determining the ownership of a property, whether it is solely or jointly owned.
Spousal maintenance may also be a proper subject of a BFA. Spousal maintenance is the financial support provided to a person after the breakdown of the relationship. If the parties have included in the BFA a provision on spousal maintenance then the recipient of the maintenance does not anymore have to prove to the court that he is entitled to spousal maintenance. All that the recipient needs to do is to enforce the BFA. With respect to spousal maintenance, the BFA must specifically mention the name of the spouse or de facto partner and the amount that will be provided in case the marriage or de facto relationship breaks down.
A BFA must comply with the requirements mandated by the Family Law Act for it to be upheld valid and enforceable. Otherwise, a party may have the BFA set aside for unenforceability due to mistakes in the drafting of the BFA or failure to comply with the requirements of the Family Law Act. Other grounds to have the BFA set aside are fraud, mistake and undue influence. Material change in circumstances is also another ground for setting aside a BFA such that it must be proven the BFA will cause hardship on the party who petitioned to set aside the BFA.
Although a BFA is binding and enforceable between the parties, it may still be varied or terminated. The termination or variation must follow the requirements of the Family Law Act otherwise the BFA will remain enforceable as it is. Parties are not released from the BFA unless the parties have had it terminated or varied. Even if a party is already dead, the BFA will continue to be enforceable against his estate.