A Binding Financial Agreement (BFA) is a written agreement, which must comply with the strict requirements of the Family Law Act 1975 to be binding and enforceable.
A BFA can be entered into by a married couple or by two people in a defacto relationship, including same sex couples. It can be made prior to the commencement of cohabitation or marriage (often referred to as a “pre nuptial agreement”), during the course of the relationship, or following separation and divorce.
A BFA deals with the parties’ assets and financial resources and regulates their rights and the division of assets in the event of a relationship breakdown. The effect of the BFA is to prevent either party making an application to the Family Court for the division of property and it provides a form of asset protection. This is particularly important where one party to a relationship has significantly greater assets or in situations where one or both parties have already been through the breakdown of a previous relationship. It can also provide stamp duty and Capital Gains Tax relief as part of a property settlement.