Like Consent orders, Binding Financial Agreements set out how property and financial resources are to be divided upon the breakdown of the relationship. The advantage of a BFA is that it can be entered into prior to marriage, during a marriage, or after a divorce order is made, unlike consent orders which can only be entered into following separation.
The disadvantages however are as follows:-
- As the BFA is not required to be submitted to the Court for approval, if one party wishes to contest it at a later date, there is greater potential for the Court to declare the Agreement non-binding, or to set it aside.
- There are strict rules associated with Binding Financial Agreements, non-compliance with which can render the agreement unenforceable.
- The approach of the courts to the relevant provisions of the Family Law Act which govern BFA’s and how they might be varied or set aside, remains in a state of evolution. There are areas where clarification will only be known by ultimate rulings from the Full Court of the Family Court or the High Court of Australia.
- There is the continuing possibility of further amendments to the legislation governing Financial Agreements. Again, the form and effect of any such future change is not presently known and is impossible to predict.
It is accordingly the practice of our firm not to recommend Binding Financial Agreements where Consent Orders can be prepared as an alternative.