Navigating the complexities of a relationship breakdown can be emotionally and financially challenging.

Binding Financial Agreements, also known as pre-nuptial, post-nuptial, or separation agreements and sometimes referred to as spouse loan agreements, offer married or de facto couples a way to plan for the potential division of assets and financial support in the event of a separation or divorce.

These legally binding agreements are governed by the Family Law Act 1975 for married parties, and the Family Court Act 1997 for de facto partners in Western Australia. They can provide clarity and certainty during a difficult time.

What are Binding Financial Agreements?

A Binding Financial Agreement is a written contract between two parties that outlines their financial arrangements in case their relationship ends. These agreements can be made before, during, or after a marriage or de facto relationship, allowing couples to tailor the terms to their specific circumstances.

Requirements for a valid BFA

For a Binding Financial Agreement to be legally binding, it must meet several crucial requirements set forth by the Family Law Act 1975 or Family Court Act 1997. These include:

• Written Agreement: The agreement must be in writing and signed by both parties.
• Independent legal advice: Before they each sign, each party must receive independent legal advice from a qualified lawyer about the effect of the agreement on their rights and the advantages and disadvantages of entering into it.
• Statement of advice: A statement signed by each party’s solicitor must be included, confirming that they gave legal advice before the party signed the agreement.
• No duress or fraud: The agreement must not be entered into under duress, fraud, or undue influence.

Consequences of non-compliance

If a Binding Financial Agreement fails to meet the requirements outlined in the Family Law Act 1975 or Family Court Act 1997, it may not be binding, and the court can set it aside under certain circumstances.

These circumstances include fraud or material non-disclosure, unconscionable conduct, material changes in circumstances, hardship, or if the agreement is void or unenforceable due to uncertainty or non-compliance with legislative requirements.

Termination of a Binding Financial Agreement

A Binding Financial Agreement can be terminated in two ways:

• New Financial Agreement: The parties can enter into a new financial agreement, provided that a specific provision is included stating that the former agreement is terminated.
• Termination Agreement: The parties can enter into a termination agreement.

Seeking legal advice

There is no requirement for the agreement to be fair or reasonable. Binding Financial Agreements are complex legal documents with significant implications for your financial future. It is crucial to seek the guidance of an experienced family lawyer to ensure that your agreement is tailored to your specific circumstances, meets all legal requirements, and adequately protects your rights and interests.

At O’Sullivan Davies, our team of skilled family lawyers are dedicated to providing comprehensive legal advice and support throughout the process of creating or terminating a Binding Financial Agreement.

Contact us today to schedule a consultation and take the first step towards securing your financial future.