Introduction

A Binding Financial Agreement (BFA) is a legal contract between parties that determines how their property and financial resources will be divided if their relationship ends. Often called "prenups" or "postnups," these agreements can provide certainty and protection for fathers entering into or during relationships.

Types of Binding Financial Agreements

Section 90B Agreement (Before Marriage)

Also known as: Prenuptial agreement or "prenup"

When made: Before marriage

Covers: How property will be divided if the marriage ends

Common scenarios:

  • One party has significant pre-marriage assets
  • Business ownership protection
  • Inheritance protection
  • Second marriages with children from previous relationships

Section 90C Agreement (During Marriage)

Also known as: Postnuptial agreement or "postnup"

When made: During marriage

Covers: Current and future property arrangements

Common scenarios:

  • Significant change in financial circumstances
  • Starting a new business
  • Receiving large inheritance or gift
  • Relationship difficulties requiring clarity

Section 90D Agreement (After Separation)

Also known as: Separation agreement

When made: After separation but before divorce

Covers: Division of existing property and assets

Common scenarios:

  • Avoiding court proceedings
  • Finalizing property settlement
  • Agreeing on spousal maintenance
  • Protecting business interests

De Facto Relationship Agreements

Similar agreements exist for de facto relationships:

  • Section 90UB: Before entering de facto relationship
  • Section 90UC: During de facto relationship
  • Section 90UD: After separation from de facto relationship

Legal Requirements for Valid BFAs

Essential Requirements

  • Written agreement: Must be in writing and signed by both parties
  • Independent legal advice: Each party must receive independent legal advice
  • Legal advice certificates: Lawyers must provide certificates confirming advice given
  • No cooling-off period: Agreements take effect immediately when signed
  • Full disclosure: Both parties must fully disclose their financial circumstances

What the Legal Advice Must Cover

  • Effect of the agreement on rights and obligations
  • Advantages and disadvantages of making the agreement
  • Whether it's prudent to make the agreement
  • How the agreement would be enforced
  • Rights that would exist without the agreement

What Can Be Included in BFAs

Property and Assets

  • Real estate (family home, investment properties)
  • Business interests and shares
  • Superannuation funds
  • Bank accounts and investments
  • Personal property (cars, jewelry, furniture)
  • Intellectual property

Financial Obligations

  • Debts and liabilities
  • Spousal maintenance arrangements
  • Financial support obligations
  • Insurance arrangements
  • Tax obligations

What Cannot Be Included

  • Child support arrangements
  • Parenting arrangements
  • Non-financial personal matters
  • Illegal or unconscionable provisions

Important Limitation

BFAs cannot override child support obligations or parenting arrangements. These matters are always determined based on the best interests of the child at the time of separation.

Advantages and Disadvantages

Advantages

  • Certainty and predictability
  • Protection of pre-relationship assets
  • Avoid lengthy court proceedings
  • Reduced legal costs if relationship ends
  • Business protection
  • Privacy (no public court records)
  • Control over outcomes

Disadvantages

  • May not reflect future circumstances
  • Can be set aside by courts
  • Upfront legal costs
  • May create relationship tension
  • Complex legal requirements
  • Limited flexibility
  • May become outdated

When BFAs Can Be Set Aside

Courts can set aside BFAs in certain circumstances:

Procedural Defects

  • Inadequate legal advice
  • Missing or defective certificates
  • Failure to disclose financial circumstances
  • Not properly signed or witnessed

Substantive Grounds

  • Fraud or duress
  • Unconscionable circumstances
  • Material change in circumstances
  • Hardship to children
  • Agreement would be unjust and inequitable

Changed Circumstances

  • Birth of children
  • Serious illness or disability
  • Significant change in income or assets
  • Long-term relationship duration

Drafting Effective BFAs

Key Considerations

  • Clear and specific language
  • Comprehensive asset identification
  • Fair and reasonable provisions
  • Consideration of future scenarios
  • Regular review mechanisms

Common Clauses

  • Asset and liability schedules
  • Division formulas or percentages
  • Spousal maintenance provisions
  • Business protection clauses
  • Inheritance and gift provisions
  • Review and variation mechanisms

Costs and Timeframes

Legal Costs

  • Each party pays for their own legal advice
  • Costs vary based on complexity
  • Simple agreements: $2,000-$5,000 per party
  • Complex agreements: $5,000-$15,000+ per party
  • Consider long-term savings if relationship ends

Timeframes

  • Simple agreements: 2-4 weeks
  • Complex agreements: 1-3 months
  • Negotiation time varies
  • Allow time for proper legal advice

Alternatives to BFAs

Consent Orders

  • Court-approved agreements
  • Made after separation
  • Harder to set aside than BFAs
  • Court oversight provides additional protection

Informal Agreements

  • Not legally binding
  • May influence court decisions
  • Less expensive to create
  • Limited enforceability

Special Considerations for Fathers

Business Protection

  • Protect business assets and operations
  • Prevent forced sale of business
  • Maintain control of business decisions
  • Consider employee and client impacts

Inheritance and Family Assets

  • Protect family property for children
  • Preserve generational wealth
  • Consider tax implications
  • Balance fairness with protection

Second Relationships

  • Protect assets for children from first marriage
  • Clarify financial obligations
  • Consider blended family dynamics
  • Plan for complex family structures

Review and Variation

When to Review

  • Birth of children
  • Significant change in income
  • Major asset acquisition
  • Business changes
  • Every 5-10 years

Variation Process

  • Both parties must agree to changes
  • New legal advice required
  • Same formalities as original agreement
  • Consider terminating and creating new agreement

Considering a Binding Financial Agreement?

BFAs are complex legal documents that require careful consideration and expert advice. Get professional guidance to protect your interests.

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Legal Disclaimer

This information is for educational purposes only and should not be considered legal advice. Binding Financial Agreements are complex legal documents with strict requirements. The validity and enforceability of BFAs depend on specific circumstances and proper compliance with legal requirements. Laws and court interpretations can change over time. Always consult with qualified family law professionals for advice specific to your situation. DadAssist makes no warranties about the accuracy or completeness of this information.