Many couples think of a Binding Financial Agreement (BFA) as a pre-nup, but it is much more than just that. Usually drawn up by a family lawyer, a BFA can be entered into at any stage of a relationship; before, during or after a marriage or de-facto relationship is entered into. If you were wondering what benefits such an agreement has, here are some of them.
- When a BFA is drawn up when a couple are still happy, either before or during a relationship, it is highly likely to contain elements that are reasonable and agreeable to both parties. So if the relationship then fails, there is no need for either party to worry about whether it is fair or just.
- People these days often go through more than one relationship. It can give a previously divorced person peace of mind that they won’t lose everything should another relationship failure occur.
- Although a BFA can be made at any time, making one before or during a relationship is less stressful than making one after a breakup.
- It can reassure the more financially stable party that their partner is not just marrying them for their money.
- A BFA can be used to lay down ground rules about finances during a relationship. It can specify who will pay specific bills and who will be responsible for certain debts, as well as defining how much and where money should be spent.
- It is much more cost effective to have a BFA drawn up beforehand than to go to court for settlement afterwards.
- It can provide a level of security for children of a previous relationship.
- It can be used as a tool for estate planning, to ensure your wishes are adhered to about where your assets are to go.
- In some cases a BFA can provide tax or stamp duty relief for couples who have separated.
While not everyone agrees with the idea of a Binding Financial Agreement, it can certainly save a lot of stress and loss for both couples, especially if they have not been used to financial restraint beforehand. Since most fights in a relationship are about finances, drawing up that BFA might be just the thing to prevent a relationship from failing and make things more pleasant.
The best thing to do is talk things over together. It is essential for both parties to have input into the details of a BFA so that one doesn’t feel that the other does not trust them. For one person to draw up such an agreement without even telling the other about it, then expecting them to sign it without being upset over the whole thing, is like expecting to win the lottery; it is highly unlikely.