Binding Financial Agreements (BFAs) can be entered into before a couple commence cohabitation during their cohabitation and prior to separationor after they separate. When BFAs are drafted before or during cohabitation, they are often referred to as pre-nups (even though not everyone gets married), setting out what is to happen with property and spousal maintenance in the event the couple separates.
Are pre-nups worth it? Do they “hold up”? Should you view these documents as an investment? We could go on and on about all the legalities involved in preparing and entering into a BFA, however our goal today is to keep this simple and easy to understand!
To assist in providing you with information about why BFAs are worth the investment, in this post we’ll compare your BFA to your home – usually your biggest asset, and one you want to protect!
BFAs are a specialised area of family law. They are documents which should only be drafted by lawyers with extensive experience working in family law, specifically BFAs. Just like you would only ask a qualified and licenced builder to build your house, it’s important you ask an experienced family lawyer to draft your BFA. In answer to the question about whether they “hold up” – the answer is absolutely, but they need to be carefully drafted with multiple legislative requirements met.
BFAs are complex and bespoke documents. They are not pro-formas in which we simply insert your name and address and press print. Having a poorly drafted BFA has the potential to cause havoc in the event you and your partner separate. Your partner may be able to have it overturned for a variety of reasons. Consider it similar to the need to engage an experienced builder to build your dream home, rather than a first-year apprentice, or asking a plumber to build your whole house!
BFAs set out what will happen in the event you and your partner separate. Just like you have house insurance setting out what will happen in the event your house might burn down, your BFA is like an insurance policy. It’s there in the event you and your partner might separate.
BFAs require full and frank disclosure from both parties. This ensures everyone is aware of all the assets, liabilities, superannuation and financial resources before they sign the document. This is similar to advising your house insurance provider what your house is made of and how many bedrooms it has, they need to know what they are agreeing to.
A well drafted BFA that will hold up is not cheap. However, if you view them in the context of an investment, they are worth it.
In the event you and your partner separate without a BFA in place, you will very likely spend significant dollars on legal fees, even if you can agree on your asset division with minimal lawyer assistance. If you require court intervention, or even just mediation, the costs can escalate quickly. Mediation and court will likely exceed what you might have paid for a quality BFA. Consider how much you spend on house and contents insurance each year, and compare it to how much you have been quoted for a quality BFA (which comparably, is a one off payment rather than a premium which goes up each year).
BFAs are documents which you need to feel comfortable signing, and certainly understand. It’s important you find a lawyer that listens to your views and concerns and works towards implementing your goals. Just like you need to trust the person you engage to build your home, you need to feel comfortable with the lawyer you instruct.
To find out how our team can help you prepare a quality BFA that works to protect you and your family, please give us a call on 02 6248 8477 or say hello@fosterjohnson.com.au.
