When is the Best Time to Get a Binding Financial Agreement (BFA)? (Before, During or After)

Planning for the future is a wise financial decision, especially when it comes to protecting your assets and establishing clear financial arrangements in relationships. A Binding Financial Agreement (BFA) is a legal document in Australia that helps couples manage their financial matters according to Part VIIIA of the Family Law Act 1975. Whether you’re about to tie the knot, currently in a relationship, or going through a separation, understanding when to get a BFA can be critical for your financial security. Advance Family Law recommends considering these agreements at various relationship stages, depending on your specific circumstances.

Types of BFAs Explained

Before Marriage (Pre-nuptial Agreements)

Pre-nuptial BFAs are created before a couple marries or begins cohabitation in a de facto relationship. These agreements typically cover asset protection, property division, and potential spousal maintenance arrangements. The ideal timing is several months before the wedding or moving in together, allowing both parties sufficient time for consideration and proper legal advice.

During Relationship Agreements

Couples sometimes create BFAs while already married or in a de facto relationship. These mid-relationship agreements often address changes in financial circumstances, such as inheritance, business acquisition, or significant asset purchases. They offer an opportunity to update financial arrangements as your relationship and assets evolve.

Post-Separation Agreements

BFAs created after separation focus on finalising property settlements and financial matters without court involvement. These agreements often contain more detailed provisions since the parties have clarity about their separation and what assets exist at that point. They’re particularly useful when parties want to avoid the cost and stress of court proceedings.

BFAs Versus Other Settlement Options

Unlike consent orders (which require court approval), BFAs are private contracts between parties. However, BFAs must meet strict legal requirements to be enforceable. They offer more flexibility than court orders but may face greater scrutiny if challenged later.

Timing Considerations: Pros and Cons

Advantages of Pre-Relationship BFAs

Creating a BFA before marriage or cohabitation allows for clear-headed negotiation without emotional pressure. Parties can establish property protection and financial arrangements while still in a positive relationship phase. This timing allows couples to start their formal relationship with financial clarity and mutual understanding.

“The best BFAs are created when both parties can negotiate calmly and with full transparency – typically this happens when the relationship is still strong and positive.” – Advance Family Law.

Potential Drawbacks of Pre-Wedding Timing

BFAs presented too close to a wedding date may face increased scrutiny if later challenged. A last-minute agreement might raise questions about duress or pressure. Courts may examine whether both parties had adequate time for reflection and proper legal advice.

Benefits of Mid-Relationship Agreements

Creating a BFA during a relationship allows it to reflect current financial realities and recent asset valuations. These agreements can be timed around major life events like having children, receiving an inheritance, or purchasing significant property. The parties already have an established relationship dynamic, which can aid in realistic negotiations.

Post-Separation Agreement Advantages

After separation, both parties usually have a clear understanding of what assets exist and their values. This clarity can make negotiations more straightforward. Post-separation BFAs often include more definitive terms since the relationship’s end is certain rather than speculative.

Legal Requirements Affecting Timing

Formal Requirements in Australia

Regardless of timing, all BFAs must be in writing, signed by both parties, and include certificates confirming independent legal advice was provided to each party. Both parties must receive this advice before signing, which adds time to the process and should be factored into your planning.

Financial Disclosure Requirements

A BFA requires full and frank financial disclosure from both parties, including details of assets, liabilities, superannuation, business interests, and tax matters. Gathering this information takes time and may influence when you’re ready to finalise an agreement.

How Timing Affects Enforceability

BFAs created very close to weddings or during relationship stress may face greater scrutiny if challenged. Courts pay particular attention to the circumstances surrounding the agreement’s creation. Allowing sufficient time for consideration and advice strengthens enforceability.

Practical Steps for Creating a BFA

The process of creating a BFA involves several key steps:

1. Consult with a family lawyer early in the process
2. Gather comprehensive financial documentation
3. Negotiate terms that address both current and future scenarios
4. Receive independent legal advice (each party must have its own lawyer)
5. Review and sign the agreement with proper witnessing

Documents to Prepare

Before drafting a BFA, gather property titles, bank statements, superannuation statements, business valuations, tax returns, and loan documents. Having these materials ready can expedite the process and ensure accuracy.

Timeframe Expectations

Allow at least 4-8 weeks for the BFA process, depending on the complexity of your financial affairs and how readily both parties can agree on terms. Rushing this process is inadvisable and may jeopardise the agreement’s validity.

Australian-Specific Considerations

Superannuation Treatment

Superannuation is often one of the most significant assets in Australian relationships and requires special handling in BFAs. The timing of your agreement may affect how superannuation is valued and dealt with, particularly if one party’s super is growing rapidly.

De Facto Relationship Timing

For de facto couples, timing considerations include the two-year relationship threshold that typically triggers family law property rights. Creating a BFA before reaching this milestone can clarify financial arrangements before legal presumptions apply.

Common Mistakes to Avoid

Incomplete Financial Disclosure

Failing to fully disclose all assets, liabilities, and financial resources is a common reason BFAs are set aside. Allow sufficient time for thorough disclosure, verification, and documentation.

Rushing the Process

Creating a BFA too close to significant events (like weddings) can create pressure and raise questions about duress. Ideally, finalise pre-nuptial agreements at least three months before the wedding.

Attempting to Cover Parenting Matters

BFAs cannot make binding determinations about parenting arrangements or child support. These matters must be addressed through other legal mechanisms, like parenting plans or court orders.

Frequently Asked Questions

1. Can a BFA be set aside?

Yes, courts can set aside BFAs if there was fraud, duress, non-disclosure, unconscionable conduct, or if circumstances have changed making it impractical to enforce the agreement.

2. How long does creating a BFA take?

Typically 4-8 weeks, depending on complexity and cooperation between parties.

3. Can BFAs be modified later?

Yes, parties can terminate an existing BFA and create a new one, or create a supplementary agreement that varies the original terms.

Final Thoughts on BFA Timing

The best time to create an BFA depends on your specific relationship stage, asset complexity, and risk factors. Pre-relationship agreements offer preventative protection, while mid-relationship and post-separation agreements address evolving circumstances. Whatever timing you choose, thorough preparation and proper legal advice are essential for creating an enforceable agreement. Advance Family Law can provide specialised guidance tailored to your unique situation, helping you navigate this important financial planning tool at any relationship stage.