Planning for your financial future as a couple is a wise step, whether you’re about to get married, are in a de facto relationship, or have significant assets to protect. A Binding Financial Agreement (BFA) provides legal clarity about how assets will be divided if your relationship ends. Timing is everything when it comes to these important legal documents. If you’re wondering about the right moment to put one in place, you can find out more about the process and costs involved.
What is a Binding Financial Agreement?
A Binding Financial Agreement is a legal document under the Family Law Act 1975 that allows couples to decide how their assets will be divided if their relationship breaks down. These agreements can cover property, financial resources, and spousal maintenance.
BFAs are available to married couples, de facto partners (including same-sex couples), and those planning to enter either of these relationships. They must be in writing, signed by both parties, and include certificates confirming that each party received independent legal advice.
“The strength of a Binding Financial Agreement lies not just in its legal provisions, but in the timing of when it’s created and the full disclosure between parties.” – Advance Family Law
Optimal Timing for a BFA
There are several strategic times when entering a BFA makes particular sense:
Before Marriage or Registering a De Facto Relationship
Creating a BFA before formalising your relationship (sometimes called a prenuptial agreement) is ideal for protecting pre-existing assets, family businesses, or inherited wealth. This timing allows for clear-headed discussions before emotional commitments deepen.
Shortly Before or After Wedding Celebrations
While many prefer to finalise agreements well before the wedding, some couples choose to complete the process shortly after celebrations. This timing can reduce stress during wedding preparations but should not be left until the last minute.
During a Long-term Relationship
Partners in established relationships might consider a BFA when one acquires significant assets, starts a business, or receives a substantial promotion. These agreements during relationships (sometimes called postnuptial agreements) can address changing financial circumstances.
After Separation
BFAs can also be created after a relationship ends. This timing helps formalise financial arrangements without court intervention, potentially saving time and reducing conflict.
Following Major Life Events
Significant life changes often trigger the need for a BFA, including:
- Receiving an inheritance
- Purchasing or selling significant property
- Starting or selling a business
- Planning for retirement
- Relocating overseas
When Children from Prior Relationships are Involved
Blended families often benefit from clear financial agreements that address how assets will support children from previous relationships, providing security for all family members.
Legal Requirements Before Signing
Timing isn’t just about the stage of your relationship – it’s also about allowing sufficient time for proper legal processes:
Full financial disclosure between parties is mandatory. Both partners must reveal all assets, liabilities, financial resources, and income. Hiding information can lead to the agreement being set aside later.
Each party must receive independent legal advice. Your lawyers will need time to review the agreement, explain its implications, and provide certificates confirming this advice was given.
The agreement should consider possible future circumstances such as having children, illness, or significant income changes. These factors might affect how fair and reasonable the agreement remains over time.
Superannuation, tax consequences, and estate planning implications should all be addressed, which may require consultation with financial advisors in addition to lawyers.
Preparation Process
Creating a valid BFA involves several steps that require adequate time:
- Gather comprehensive financial documentation
- Create detailed schedules of assets and liabilities
- Draft the agreement with clear terms
- Arrange independent legal advice for both parties
- Make any necessary revisions based on legal advice
- Sign and properly witness the agreement
Working with specialists in family law is essential. Some agreements may also benefit from input from tax advisors or financial planners, especially for complex asset structures.
Avoiding Common Pitfalls
Proper timing helps avoid several common problems with BFAs:
Rushing the process may result in inadequate financial disclosure. Allow sufficient time for thorough documentation of all assets and liabilities.
Agreements signed under pressure or immediately before significant events (like weddings) may be vulnerable to claims of undue influence. Starting the process early demonstrates voluntariness.
Vague clauses often result from rushed drafting. Clear, specific language requires careful consideration and sometimes multiple revisions.
Changes in circumstances may require updates to the agreement. Regular reviews (every 3-5 years or after major life events) help maintain its relevance.
Timeframes and Costs
A properly drafted BFA typically takes 4-8 weeks from initial consultation to final signing. Complex agreements involving businesses or international assets may take longer.
Costs vary based on complexity, with factors including:
- The number and nature of assets involved
- Whether specialist advice is required
- The amount of negotiation between parties
- Time spent on amendments and revisions
After signing, store the original agreement securely, with copies kept by each party’s lawyer. Supporting documents showing financial disclosure should also be retained.
Potential Challenges to BFAs
The timing of when you create your BFA can affect how resistant it is to legal challenges. Courts may set aside agreements due to:
Non-disclosure of assets or financial resources at the time of signing
Evidence of unconscionable conduct or fraud
Lack of proper independent legal advice
Signs of duress or undue pressure when the agreement was made
If successfully challenged, the agreement may be entirely set aside, allowing for property settlement under normal Family Law Act provisions.
Decision-making Checklist
Consider these factors when deciding the right time for your BFA:
- Are there significant assets or businesses to protect?
- Is an inheritance or financial windfall expected?
- Are there children from previous relationships?
- Do you have sufficient time before any major event (like a wedding)?
- Can both parties afford independent legal advice now?
- Is there enough emotional space to discuss financial matters openly?
Before booking legal advice, gather relevant financial documents, consider what you hope to achieve, and think about which assets are most important to protect.
The best time to create a BFA balances legal requirements with relationship considerations. While a BFA can be created at various stages, allowing sufficient time for reflection and proper legal process is always beneficial.
Whether you’re planning marriage, managing substantial assets, or considering your options after separation, understanding the timing factors for a Binding Financial Agreement can save you stress and strengthen the legal validity of your agreement. Advance Family Law can provide the guidance you need to make informed decisions about protecting your financial future through a properly timed and executed Binding Financial Agreement.
