What is a Binding Financial Agreement and why is it good for me?

A Binding Financial Agreement (or ‘BFA’) is a private agreement between two people who are or have been in a relationship or marriage and wish to formalise their financial affairs. A BFA can be utilised before entering into a relationship or marriage, often called a ‘pre-nup’, to set out what each of the party has at the commencement of the relationship. A BFA can also be utilised during or at the end of a relationship or marriage to transfer property, assets and debts and sever the financial ties without Court intervention and to suit the parties. Binding Financial Agreements are drafted by one of the parties solicitors before both parties must sign the document after receiving independent legal advice. If one party does not receive legal advice before signing, the agreement will not be binding on the other party. Binding Financial Agreements are confidential and each party will receive a copy once executed. The parties can then use the Binding Financial Agreement to transfer property to either party, or sell it if necessary, as well as deal with other assets such as cars and shares. Binding Financial Agreements are suitable for parties when they agree as to the distribution of their property at the end of the relationship and do not wish to utilise the Court system. These agreements are fast and easy and can provide the parties with a resolution to their complete financial affairs without the need for a Court application or substantial financial disclosure. There is no scrutiny of a Court with a BFA, whereas there is with a Consent Order. The risk is that one party may receive more or less than they should or ought to if the Court is involved. The other risk is that despite executing a BFA, one party can still elect to file an Application for property division in the Court and a BFA will not act as a barrier to Court action, but the agreement may well be relevant to the proceeding.