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ENSURING ASSETS ARE PROTECTED OR DIVIDED Featured
29 December 2021 Posted by 

ENSURING ASSETS ARE PROTECTED OR DIVIDED

Starting or finishing: we need agreements 
KATHERINE HAWES
WHETHER you and your partner are just starting your lives together or have decided to separate, BFAs are instrumental in ensuring that you are able to decide how yours and your partner’s finances, property and financial resources are protected, or divided, without the intervention of a courtroom.
 
Binding Financial Agreements
 
Many BFAs have been set aside on the basis that the document does not adhere to the requirements in s 90G of the Family Law Act 1975 (Cth). This section prescribes that the document will be binding on all parties if: 
 
1. The agreement is signed by all parties;
2. Before signing the agreement, each party was provided with independent legal advice from a lawyer about the effect of the agreement and the rights, advantages and disadvantages of the parties entering into the agreement;
3. A copy of a statement of independent legal advice is given to the party that received the advice;
4. The agreement has not been terminated or set aside from the Court.
 
Throughout this framework, the importance of independent legal advice is highlighted to ensure that the parties are entering into the agreement fully informed and avoiding any ambiguity as to their rights and obligations. The Family Law Act prescribes that legal advice provided to clients includes the following:
 
1. That you understand the effect of the agreement upon your rights to property and finances; 
2. That you understand the advantages and disadvantages to you when signing the document, considering your contributions to the relationship, the contributions brought into the relationship and your current financial resources. 
 
Therefore, the initiating partner engages an experienced solicitor to draft the BFA. Once the client is happy with the BFA it is provided to the other partner in order that they can seek a solicitor to provide Independent Legal Advice.  
 
How can a BFA be invalidated?
 
There are many cases where the Court has ruled that a BFA is not valid, even in situations where legal advice has been provided to the parties. This usually occurs where the legal advice is not substantive or exhaustive enough to qualify as independent legal advice under the legislation. Below is an example where a Binding Financial Agreement has been struck out: 
 
Purdey & Millington (2018) FFCA 213:
The Court sided with the Wife and struck down the BFA largely due to the nature of the independent legal advice that she was given by Lawyer A. Specifically, the Court took the following into account when examining the advice given to the Wife: 
 
1. That the Wife’s English speaking and reading skills were limited and she had limited exposure to the outside world as her focus was the household and her family. 
2. The Husband made the appointment and paid the fee for the meeting between Lawyer A and the Wife. 
3. Lawyer A could produce no documents related to the review.
 
 
Therefore, the Court may look behind a certificate of legal advice and examine the substance of that advice in deciding. 
 
Two Tier Independent Legal Advice
 
On consideration of these matters, and further case law, it becomes evident that the requirement of independent legal advice is two tiered. That is, not only must the advice be substantive, and exhaustive, but it must also be independent. 
 
Independent legal advice is also two tiered in that the solicitor drafting a BFA must advise you that your partner/ex-partners must engage Independent Legal Advice on a BFA that has been provided to them for signing.  
 
Independent Legal Advice
 
Irrespective of which role you engage us for, drafting or review of a BFA, we ensure that our independent legal advice adheres with the approach taken by the Courts and the Family Law Act. 
 
Katherine Hawes is a solicitor and barrister who owns and operates Digital Age Lawyers. She has over 20 years’ experience in commercial law and will guide you through your business legal strategy. www.digitalagelawyers.com
 
 
 


editor

Publisher
Michael Walls
michael@accessnews.com.au
0407 783 413

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