Preparing a BFA should not be rushed. It is an opportunity to consider the needs of the parties in the relationship, to obtain legal advice and to prepare an agreement that is fair in setting out the terms that parties agree too. In fact, it is important that each party has had the chance to consider the contents of a proposed agreement and it is a legal requirement that each party to a BFA obtain independent legal advice prior to signing the agreement.
This requirement is to ensure that each party has access to their own advice, to avoid the risk of coercion and to ensure that they understand the contents of the agreement. This advice is detailed and takes a client through the document, clause by clause, considering the rights and consequences of this agreement if it is ever relied on, the advantages and disadvantages of the agreement for each party and to provide an opportunity to ask any questions and receive advice, specific to their needs.
What makes a BFA so important is clarity. Life changes. Relationships evolve. And while no one enters a relationship thinking about separation, having a plan in place can make all the difference if things don’t go as expected. It can save money by avoiding the need for courts and extensive legal advice on separation, it can save time and stress. In one sense, it can be considered as a guide for how to amicably separate. The decisions were made when people were not under duress and it is simply a matter of following the steps set out in the agreement, knowing that each party’s rights and needs are protected.
Without a BFA, financial, property and potentially business matters are often decided through lengthy, stressful, and expensive legal processes. With a BFA, you and your partner decide what is fair, based on your own circumstances, values, and goals.
To some, considering the preparing a BFA may initially feel like a daunting thing to do, but when considering the potential loss, cost and outcome of a relationship breakdown going through the courts, it is actually a caring thing to do. It’s not about distrust — it’s about transparency and respect.
What can a BFA do for you?
BFA’s can take a wide range of circumstances into consideration. Amongst other things, a well-prepared agreement can:
Protect assets you’ve built before the relationship
Provide clarity about any future shared assets and how they will be owned
Protect any future inheritances or income
Provide clarity around shared finances
Reduce the risk of future disputes
Save significant emotional and financial stress down the track
Most importantly, it creates the opportunity for clear conversations around money and assets — something that strengthens relationships, not weakens them.
At its core, a Binding Financial Agreement is about clarity and certainty. It supports you to move forward in your relationship feeling secure, knowing that both parties are protected, respected, and on the same page.
Binding Financial Agreements
A Binding Financial Agreement (BFA) (or a ‘pre-nup’ as it is sometimes referred to, particularly in the USA) is a document designed to create clarity, security, and peace of mind for the financial future of those in a relationship.
What is a BFA?
In Western Australia, a BFA is a legally recognised and binding agreement (when prepared correctly) that outlines how assets, finances, and responsibilities will be managed if a relationship ends. It can be put in place before, during, or after a relationship, and allows both parties to make decisions together — rather than leaving those decisions to a court later on.
A person does not need to sign a draft BFA, rather by obtaining advice, there are opportunities to understand, clarify and negotiate the terms of an agreement, if necessary. Agreements should only be signed and agreed to when a client understands the advantages and disadvantages of the agreement for them, is comfortable with the terms of the agreement and what it means for them now and into the future.
When should people consider preparing a BFA?
In Australia, a BFA can be prepared at any time in a relationship, either before marriage, at the point that a relationship is approaching or meets the criteria for a de-facto relationship, during a marriage or de-facto relationship or following a relationship separation. This is why these agreements are referred to as a BFA in Australia, because they are not just ‘pre-nuptial’, or prepared prior to a marriage, they can be prepared at any point in a relationship.
Who are BFA’s for?
BFA’s can be beneficial for people of all ages and stages in life. In fact, BFA’s can be particularly beneficial for people who are older and entering a new relationship.
Consider having been in a marriage for 27 years, then due to death of your partner or as a result of divorce, you now find yourself single and perhaps with some assets behind you. In time, you meet a new person and a relationship develops. If the appropriate legal structures or agreements are not in place and that relationship ends at a point in the future, claims can be made against your assets or vice versa.
Another scenario could be with a relationship involving a younger partner and the potential for a second family. In this scenario, obtaining legal advice and preparing a BFA can provide an opportunity to ensure that all party’s needs and rights are considered and addressed, then recorded in an agreement.
Why is it worth having a BFA?