Binding Financial Agreements and Children - Unavoidable Truth
When parties enter into a Binding Financial Agreement (BFA) under the Family Law Act 1975 (Cth), the presence or potential arrival of children is a critical factor.
Key Points:
Without a Termination Clause, a BFA will continue to operate when children are born
Agreements are often challenged and set aside (void) where hardship occurs for a parent or child
Child Support is separate from family law property rights
It can’t be addressed at a later date unless both parties agree
CAC Legal can tailor an agreement that both protects your assets, while addressing this unavoidable fact
In many relationships, one parent may assume the primary caregiving role, stepping back from paid employment, interrupting career progression, or carrying the majority of household duties. These contributions, while not always financial, are recognised by the Family Law Act as sacrifices that directly support the family unit and the earning capacity of the other party and are strongly considered in the breakdown of the relationship
In entering into a basic Binding Financial Agreement, those rights are generally forgone
For example, where one parent continues in paid employment, they retain the benefit of superannuation growth, asset accumulation, and career advancement. Under a BFA, those gains usually remain with the working party, while the caregiving party is left without the same opportunity to build financial independence
If these realities are not accounted for, the agreement may later be challenged and set aside, as unfair, impracticable, or causing hardship to a parent or child – Unfortunately, many of the solicitors you will find online, will simply take your money and not mention this
It is also important to note that a BFA cannot deal with issues of child support or parenting arrangements, which can only be dealt with after separation, through different mechanisms (formal or informal)
Child support, in particular, is governed by the Child Support (Assessment) Act 1989 (Cth) and determined by the incomes of the parents, percentage of custody, etc - after separation. These amounts are usually minimal in comparison to a family law property adjustment, where children exist
Acknowledging the potential rights forgone—especially the growing disparity that can arise when children are born—while also understanding the limits of what a BFA can and cannot cover, ensures that the agreement remains ethical, valid, and legally sound
A considered, well drafted and refined agreement can adequately deal with children, providing greater certainty for both parties while safeguarding the interests of the children
Speak with CAC Legal today for a safe and ethical solution for you and your partner
