Prenup / Binding Financial Agreements
A Binding Financial Agreement (BFA) is commonly known as a prenup. A BFA can be entered into by parties who plan to marry, or are married or are separated and can also be entered into by those who live together but are not and/or do not intend to marry (defacto relationships).
The purpose of a prenup or BFA is for parties to document their agreement on how they will divide their assets in the event they were to separate in the future. A BFA can also provide for who is to pay maintenance to the other, or can prevent either party from seeking maintenance payments.
Prenups / BFAs can be structured in countless ways. They can; provide for how parties are to pay for rates and expenses over a jointly owned property during the relationship, they can deal with the division of inheritances (or protect those inheritances), they can also explain how assets are to be acquired during the relationship. When you think about a BFA it is important to remember that this is a document that can and should cater for your specific needs.
Benefits of a Prenup / BFA
- The biggest benefit is the certainty the agreement provides to both parties to a relationship, and their families. Parties know what they will get in the event they separated;
- Reaching an agreement about how property is to be divided in the event of separation, while parties are happy in a relationship means that it is more likely to reflect something they both consider to be reasonable;
- A BFA protects the assets each party brings into the relationship;
- A BFA attempts to prevent either party from making an application to the Court for a property division at the conclusion of a relationship. This means that if the relationship ends parties might see huge savings in both legal fees and emotional well-being;
- BFAs are particularly useful for second marriages/relationships or relationships that are entered into where there is inequity in the parties’ financial positions;
- Entering into a discussion about a BFA allows parties to explore the ways in which they wish to structure their finances going forward, many parties find that it brings them together to have the decisions regarding their finances decided sooner;
If you, or someone you know, is thinking of entering into a relationship or is currently in a relationship and could benefit from a discussion about whether a Prenup / BFA is right for them please contact Amy Jenkins, Head of our Family Law Team on (02) 8987 0000.