There are different types of Financial Agreements that will apply, dependent on your circumstances. All sections are pursuant to the Family Law Act 1975 (Cth). If you are:
Anyone could enter into an enforceable Binding Agreement. As noted above, couples at any stage of their relationship can enter into such an Agreement. Heterosexual or homosexual (de facto) couples can both enter into a BFA. The types of Agreements and their relevant sections are the same for opposite or same-sex couples.
Both parties intending to enter into a BFA must ordinarily reside in Australia. Each party must also get Independent Legal Advice from different lawyers working in different law firms. The lawyers must also sign a Certificate confirming that the advice, as required by the Family Law Act 1975 (Cth) was given to their client before their client signed the Agreement.
You cannot enter into a BFA if you are already in a valid BFA with another person. For example, you wouldn’t be able to enter into a BFA with a mistress if you already have a BFA with your wife.
There are many benefits for entering into a BFA. Firstly, a BFA can be a type of ‘relationship insurance’. It would serve as a safety net, regardless of whether it ends up being used or not. Secondly, it can empower a couple to decide in advance what they would quantify as a fair distribution of financial assets, resources and liabilities. It can also mean that laying out provisions whilst the relationship is happy together, if entering into a BFA prior to separation, means the agreement is likely to reflect what both parties would accept is reasonable.
A BFA can also enable the more financially wealthy partner that the other party is not in the relationship for materialistic reasons. Additionally, ground rules are able to be established regarding who will pay for what bills, how property is divided and where income will go. If either party has already been a separation or divorce, a BFA can also provide reassurance.
Finally, a BFA can be a more cost-effective and simple solution than other options post-separation. This could include the higher costs of trying to negotiate a settlement or having the Court decide the division of assets and financial resources.
There can be some risks to entering into a BFA. This can include that it is sometimes difficult to bring up the topic of entering into such an Agreement with your partner. Your partner may fail to see any benefit for themselves. Secondly, BFA’s do not allow for Third Parties to enter the Agreement. The actual agreement may also end up being unfair for one party, if not all possible scenarios are accounted for. It is notable that the Court will not set aside a BFA simply because it is unfair to one party.
The legal fees in drafting the Agreement and the requirement for both parties to retain separate Independent Legal Advice can also be costly. There is also no scrutinizing body to consider the terms of BFA, nor is there a registration system to note when a BFA has been entered into. Finally, the law surrounding a BFA can be complicated and there are not many cases as to when a BFA has been set aside. This can cause a degree of uncertainty.
The answer is: Yes. A BFA can serve as an important piece of evidence for a Will.
For example, it has become increasingly common for adult children to encourage a re-partnering parent to enter into a BFA. This is because they may be concerned as to whether property or family heirlooms may be lost.
A Binding Financial Agreement can offer some protection in relation to the parent’s assets if the new relationship breaks down. Depending on the provisions of the parent’s will and the circumstances following their death, the BFA can serve as helpful and relevant evidence as to how that party intended to divide their property, resources and assets.