DIY Binding Financial Agreement: 3 Helpful Benefits

What Is a Binding Financial Agreement?

A Binding Financial Agreement (BFA) is a legal document that outlines the division of assets, financial arrangements, and liabilities between parties in a relationship, such as de facto partners or married couples.
A Binding Financial Agreement is a private contract between two parties that dictates how assets, property, and financial matters will be handled in the event of a separation.

While preparing a BFA yourself can save time and money, it requires careful attention to detail to meet the legal requirements outlined in Australian family law. This guide explores what a BFA entails, the steps to create one, its risks, and how to ensure it is legally binding.

It can be established before, during, or after a relationship and must comply with the Family Law Act 1975. Opting for a DIY approach means drafting the agreement yourself without hiring a lawyer for the entire process, though independent legal advice remains mandatory to finalise the agreement.

Key Takeaway: A DIY Binding Financial Agreement offers a cost-effective solution, but you must ensure it aligns with Australian legal standards.

Can You Draft a DIY Binding Financial Agreement?

Yes, you can draft a Binding Financial Agreement yourself. Many templates and kits are available online to help you create the document. However, the Family Law Act requires both parties to receive independent legal advice about the agreement’s effect and implications.

A lawyer must confirm the advice in writing for the agreement to be enforceable.

Steps involved in drafting a DIY Binding Financial Agreement include:

1. Identifying all assets, liabilities, and financial arrangements.
2. Clearly outlining terms that both parties agree upon.
3. Use a professional template or guide to structure the document correctly.
4. Each party should seek independent legal advice to ensure enforceability.

Key Takeaway: While you can draft the agreement yourself, legal advice is non-negotiable to ensure validity.

Benefits of a DIY Binding Financial Agreement

1. Cost-Effectiveness: Creating the agreement yourself can significantly reduce legal expenses.
2. Flexibility: DIY agreements offer flexibility in customising terms to suit your circumstances.
3. Privacy: Since the agreement is private, you can resolve financial matters without court involvement.

Key Takeaway: A DIY approach provides financial savings and flexibility but requires careful drafting to avoid errors.

Risks of DIY Binding Financial Agreements

While DIY Binding Financial Agreements can save costs, they come with risks:

• Errors in Drafting: Inaccurate or incomplete documents may render the agreement unenforceable.
• Complex Legal Language: Misinterpreting legal requirements can lead to disputes later.
• Failure to Meet Legal Standards: Without proper legal advice, the agreement might not comply with the Family Law Act.

To minimise risks, use reputable templates and prioritise seeking independent legal advice.

Key Takeaway: Avoid potential pitfalls by ensuring the agreement is legally sound and correctly drafted.

How to Ensure Your DIY Binding Financial Agreement Is Legally Binding

To make your DIY Binding Financial Agreement enforceable under Australian law:

1. Ensure the document is comprehensive and free of errors.
2. Obtain independent legal advice for both parties before signing.
3. Include a lawyer’s certificate to confirm the advice given.
4. Keep a signed and dated copy for both parties and their legal representatives.

Key Takeaway: Legal advice and compliance with formalities ensure the agreement stands up in court.

When Is a DIY Binding Financial Agreement Not Suitable?

A DIY approach may not be suitable if:

• The financial situation is highly complex or involves significant assets.
• There are disputes or unequal bargaining power between the parties.
• You are unsure about the legal or financial implications of the terms.

Engaging a family lawyer may provide better protection and clarity in such cases.

Key Takeaway: Assess the complexity of your financial situation to determine whether a DIY approach is appropriate.

Creating a DIY Binding Financial Agreement can be economical to manage financial arrangements between parties. However, attention to legal requirements and seeking independent legal advice are indispensable for a valid and enforceable agreement.

While the DIY route suits straightforward situations, complex cases may warrant professional legal assistance.