Misconception of Binding Financial Agreement

Family Law issues affect most of us at some point, however, many opinions or beliefs about Family Law are built on myths and misunderstandings rather than experience or knowledge, thus making it not only the most talked about but also least understood area of law.

Below are the common myths and misconceptions of Binding Financial Agreement:

1. If both parties separate, each party is entitled to 50% of the assets

While this may be the case for some relationships, it is not the case for all people and there is no automatic assumption that a court would order an equal division of your assets. In order to calculate what a person would be entitled to if they separated, the court follows a 4 step formula which involves firstly working out your assets and liabilities that are to be divided. Second, assessing the financial and non-financial contributions that each person has made to the relationship. Third, considering if either party is in need of additional financial assistance in the future, and finally whether the overall division of the assets is just and equitable. Once this formula has been applied the division of assets could be either greater or less than 50% to one person.

2. If separation is a result of the other person’s fault, they will be the one who pays the price

The Family Law Courts do not consider which partner was at fault in the marriage breakdown. In 1975, the Whitlam Government introduced the Family Law Act and for the first time in Australia, people could get divorced without having to prove that one party was at fault. The fact that a spouse may be perceived by the other party as being at fault (eg through infidelity), being lazy or not good with money will not usually impact on the issue of property settlement.

3. If both parties agree on the division of their assets, they do not require a lawyer

Once an agreement is reached, it is important that it is formalised in one of the two ways recognised as binding and enforceable by the family courts. The parties can apply to the court for consent orders or they can execute a binding financial agreement in accordance with the family law legislation and regulations. It is important that legal advice is sought in the drafting of these documents. If a property settlement is not formalised in one of these ways, the family courts will not recognise that a property settlement has occurred, which may leave parties vulnerable to a later court application seeking a further adjustment of property interests. There are additional benefits in formalising a property settlement including eligibility for an exemption on transfer duty on any property transferred between spouses.

If you are going through a separation and want to sort out your finances and parenting arrangement, Straits Lawyers are now offering online services in both English and Chinese.

Simply purchase our online services via this link: https://straits-lawyers.square.site/product/binding-financial-agreement-consultation-bfa-/5?cs=true

Alternatively, you can email us at info@straitslawyers.com or call at 08 8410 9069 to find out more.

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Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.