Having a BFA Reviewed
12 January 2024 · Read time: 5 minutes
Receiving a Binding Financial Agreement from a partner can be a sensitive and challenging situation.
While much emphasis is placed on creating these agreements, it is equally important for individuals who receive a BFA from their partner to have it reviewed by a qualified family lawyer.
Seeking your own legal advice is required to ensure that your rights and financial interests are adequately safeguarded, and that the BFA is legally valid.
In fact an independent review on behalf of the party receiving the BFA is a formal legal requirement. Without it, the BFA is not legally binding.
In Australian family law, Binding Financial Agreements (BFAs) play an important role in outlining the financial arrangements between partners in either a future end to a relationship, or following separation.
The Review Process
Here is an overview of the key steps involved in the review process:
Consultation with a Family Lawyer
The first and most crucial step is to engage the services of a family lawyer experienced in Australian family law. It's important to choose a lawyer who specialises in family law, as they will have the expertise required to understand how BFAs work, how they are typically structured, and how the contents stack up against the way that the legal system would consider the conditions that are in place (when compared to a “standard” separation as per the Federal Circuit and Family Court of Australia).
Understanding the Terms of the BFA
Your lawyer will thoroughly review the Binding Financial Agreement, examining its terms and conditions.
They will explain the legal implications of each clause, ensuring that you have a comprehensive understanding of the agreement's contents.
Compliance Check
Family law in Australia is highly regulated, and BFAs must adhere to specific legal requirements to be considered valid. Your lawyer will conduct a compliance check to ensure that the agreement complies with the Family Law Act 1975 and other relevant legislation.
Ensuring that the Binding Financial Agreement will be enforceable
Numerous factors can render a Binding Financial Agreement (BFA) unenforceable, or compromise its validity.
One common challenge arises from the failure of one party to fully disclose their assets and provide accurate values, undermining the foundational transparency required for the agreement.
Another concern could be when a significant power imbalance exists between the parties, resulting in an agreement that is conspicuously unfair and imbalanced.
Instances abound where BFAs have been invalidated by the court due to substantial changes in circumstances post-agreement, such as the onset of a life-threatening illness or the birth of a child.
These unforeseen events can significantly alter the dynamics outlined in the initial agreement, prompting the court to reconsider its enforceability.
Additionally, undue influence during negotiations has been identified as a potent factor leading to the setting aside of BFAs. Cases where one party exerts disproportionate pressure or manipulates the negotiation process may render the agreement susceptible to being declared void by the court.
Independent Legal Advice (ILA)
One of the fundamental requirements for a BFA to be legally binding is that each party must obtain independent legal advice. Your lawyer will provide you with this advice, ensuring that you fully comprehend the implications of the agreement and are making an informed decision. This includes a formal signing by the lawyer stating that independent legal advice was provided.
Generally, if the parties were not provided with sufficient legal advice before signing the agreement, the agreement will also fail to be enforceable.
Negotiation and Amendments:
If there are aspects of the BFA that raise concerns or do not align with your expectations, your lawyer can engage in negotiations with your partner's legal representative. This may involve seeking amendments to the agreement to better reflect your interests and concerns.
Certification of Independent Legal Advice
Once the review process is complete, your lawyer will issue a Certificate of Independent Legal Advice. This document confirms that you have received legal advice on the Binding Financial Agreement, and it is a crucial component for the BFA to be considered legally binding.
Benefits and Disadvantages of Binding Financial Agreements
Binding Financial Agreements (BFAs) offer a range of advantages, particularly in their flexibility compared to seeking Consent Orders through the court.
For instance, BFAs can incorporate arrangements that may not pass the court's scrutiny but are agreeable to both parties.
Consideration of Alternatives
With Consent Orders, it's important to understand that while parties may agree on an arrangement that they feel is fair, the court might not share the same perspective.
This discrepancy provides an opportune moment to explore the alternative route of a BFA. An example could be excluding one party from sharing certain benefits, such as inheritance, received by the spouse during the relationship.
Drawbacks and Risks of Financial Agreements
However, the use of BFAs is not without its risks. The formal requirements stipulated by the Family Law Act must be meticulously met; otherwise, the agreement may not achieve binding status or could be susceptible to being set aside by a court at a later date.
Wrapping it up
Reviewing a Binding Financial Agreement is a non-negotiable step in safeguarding your financial interests and ensuring compliance with Australian family law.
By consulting with an experienced family lawyer, you can gain a clear understanding of the agreement's implications, and make informed decisions that align with your best interests.
Remember, knowledge is power, and seeking legal advice is a proactive step towards securing your financial future.
Movement Legal can help you in having a BFA reviewed (or drafted). Contact our team if you require assistance.
