Binding financial agreement advantages and disadvantages
There are many things to consider when looking at the binding financial agreement advantages and disadvantages. Firstly, a binding financial agreement can be a type of ‘relationship insurance’.
Firstly, it would serve as a safety net, regardless of whether it ends up being used or not. Secondly, it can empower a couple to decide in advance what they would quantify as a fair distribution of financial assets, resources and liabilities. It can also mean that laying out provisions whilst the relationship is happy together, if entering into a binding financial agreement prior to separation, means the agreement is likely to reflect what both parties would accept is reasonable.
A binding financial agreement can also enable the more financially wealthy partner that the other party is not in the relationship for materialistic reasons. Additionally, ground rules are able to be established regarding who will pay for what bills, how property is divided and where income will go. If either party has already been a separation or divorce, a binding financial agreement can also provide reassurance.
Finally, a binding financial agreement can be a more cost-effective and simple solution than other options post-separation. This could include the higher costs of trying to negotiate a settlement or having the Court decide the division of assets and financial resources.
Risks of Binding Financial Agremeents
There can be some risks to entering into a BFA. This can include that it is sometimes difficult to bring up the topic of entering into such an Agreement with your partner. Your partner may fail to see any benefit for themselves. Secondly, BFA’s do not allow for Third Parties to enter the Agreement. The actual agreement may also end up being unfair for one party, if not all possible scenarios are accounted for. The Court will not set aside a BFA simply because it is unfair to one party.
When look at the binding financial agreement advantages and disadvantages, you will need to look at the legal fees in drafting the Agreement and the requirement for both parties to retain separate Independent Legal Advice.
There is also no scrutinizing body to consider the terms of BFA, nor is there a registration system to note when a BFA has been entered into. Finally, the law surrounding a binding financial agreements can be complicated and there are not many cases as to when a binding financial agreements have been set aside. This can cause a degree of uncertainty.
Setting Aside Binding Financial Agreements
When analysing binding financial agreement advantages and disadvantages you will need to understand that there is always a potential for a court to set aside the agreement.
Any circumstantial changes relating to children that the Court regards as material, such as wellbeing, child development and health are paramount when the Court considers setting aside a BFA.
If the Family Court finds enforcing a BFA may result in hardship on the party looking after the child if the BFA is carried out, the BFA will be set aside or varied to protect that child or children’s interest.
For example, when the binding financial agreement was entered into, the child may have lived with the mum, but later moved to live with the dad. This might be grounds for the Court to set aside the binding financial agreement.
Potentially, if the child becomes disabled or sick requiring expensive medical treatment, the BFA may be set aside if it runs contrary to the interests of the child.