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By Samira Friis, Associate at Watts McCray, Sydney
A prenuptial agreement in Australia is also known commonly as a Binding Financial Agreement or BFA for short. BFAs have become increasingly popular in Australia as a way for married or de facto couples to take control of their financial future and protect their assets (including pets).
A Binding Financial Agreement is a private agreement between couples (married or de facto) about how property and finances will be divided in the event of a relationship breakdown.
So how can a BFA provide financial empowerment? We’ve listed 5 important ways in which prenups will benefit couples.
Entering into a prenup agreement or BFA at the start of or during a relationship (prior to a relationship breakdown) can be used as part of an overall asset protection strategy, especially if:
Binding Financial Agreements can look into the future and dictate how joint property can be acquired, financially maintained and dealt with if separation occurs.
A BFA will enable you and your partner to have your own agreed rules in place about the financial aspects of your relationship, made in happier times, which often results in an agreement which is more likely to be considered by all parties to be fair and reasonable.
BFAs can provide significant comfort to parties before any relationship issues arise. The Family Law Courts do not set agreements aside, merely because they are unfair. There must be conduct such as:
Even death of a party does not impede the operation of a BFA and it will continue to be binding on that person’s representative, if separation has occurred before death.
Prenuptial agreements in Australia afford parties the same significant tax benefits as Family Court orders. Parties enjoy the benefit of stamp duty concessions and Capital Gains Tax rollover benefits, in circumstances where they would ordinarily apply should a property settlement be finalised by court orders. These tax benefits do not apply if parties divide property by way of a private or informal agreement.
Post-separation property settlement negotiations are often more cost-effective and timely, if a BFA is in place. By entering into a BFA, you can avoid significant financial and emotional costs associated with legal proceedings through the Family Court.
Protracted litigation is often significantly more costly than the preparation of a BFA. In most cases, the preparation and execution of a BFA can be achieved within a month or two, if both parties are in agreement. Of course, this depends on the complexity of the parties’ finances and the nature of negotiation. Conversely, engaging in Family Court proceedings and or dispute resolution can take years to reach determination despite the new Federal Circuit and Family Court Rules and Practice Guidelines, and the best efforts of all involved.
In the process of entering into a BFA, only you, your partner and your lawyers need to be involved in negotiating the terms of a BFA. In contrast, members of the public and even other litigants can observe Family Law hearings. The Family Court often hears from family, friends and independent experts who appear as witnesses.
Having a prenuptial agreement in Australia (BFA) is a smart way for couples to plan for their financial future and protect their assets. To ensure that the agreement is binding and enforceable, it’s important to follow the guidelines set by the Family Law Act, including seeking advice from a qualified legal professional.
At our law firm, we have a team of expert family lawyers who can help guide you through the process. If you’re interested in learning more about BFAs and how they can benefit you, don’t hesitate to reach out to us. Our friendly team is always here to help and answer any questions you may have. Simply fill out the form below to get started.
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