Disadvantages of having a Binding Financial Agreement

What are the Risks & Disadvantages of a Binding Financial Agreement 

There can be some risks, a down side or some disadvantages to entering into a Binding Financial Agreement.

This concerns many people when the issue of a Binding Financial Agreement first arises.

We’ve compiled a list for you of some of the reasons why making a Binding Financial Agreement might be risky or disadvantageous.

There are however also many advantages and  beneficial aspects to having a Binding Financial Agreement with your partner.

Disadvantages or risks associated with a Binding Financial Agreement may include:

 

 

• It may be difficult to have your spouse see any benefit for themselves, in signing a Binding Financial Agreement.

• There is no scrutiny of Binding Financial Agreements entered into by a Court or any other regulatory body. Nor is there any registration system to note that a Binding Financial Agreement has been entered into, or through which the terms of a Binding Financial Agreement are reviewed.

• Only the two (2) people in the relationship can be parties to the Binding Financial Agreement. Third Parties cannot also be parties to a Binding Financial Agreement.

• What must be set out in a Binding Financial Agreement is detailed, can be complicated and depending on the type of Binding Financial Agreement many situations may need to be covered.

• If all possible contingencies have not been thought of and covered in the agreement, the actual use of the agreement could be unfair to one or both of the parties.

• The legal fees of drafting the agreement and having separate lawyers give advice to each party, can be expensive.

• There are circumstances in which an agreement could be set aside.

• The law surrounding Binding Financial Agreements is complicated and so there is some uncertainty about whether an Agreement might be set aside and how the Courts will interpret the law for the particular situation of the parties.

More to know about Binding Financial Agreements

Now that you have read possible disadvantages of having a Binding Financial Agreement, make sure you also read about the benefits and advantages in our information sheet What are the Advantages to me of a Binding Financial Agreement.

The basic information you need to know about Binding Financial Agreements is outlined in the information sheet What is a Binding Financial Agreement.

What can you include in a Binding Financial Agreement? What should you talk with your spouse about before you enter into one? Read more in the information sheet What can I include in a Binding Financial Agreement.

Can you draft your own Binding Financial Agreement without using a lawyer? See the information sheet Can you prepare a Binding Financial Agreement myself.

You must be eligible to be able to legally enter into a Binding Financial Agreement or it will be invalid. Find out more in our information sheet Who can enter into a Binding Financial Agreement.

The timing of when you actually enter into a Binding Financial Agreement with your partner may be important. To understand why, read the information sheet When can I enter into a Binding Financial Agreement.

People often commence living together, will get engaged, have a baby together or even marry and later think about having done a Binding Financial Agreement. If this concerns you, read our information sheet Is it too late to enter into a Binding Financial Agreement.

If you do not use the correct type of Binding Financial Agreement for your own personal circumstances, it may later be set aside. We explain this in the information sheet Types of Binding Financial Agreements & What type of BFA do you need.

Can a Binding Financial Agreement really work to protect your future income and your current or future assets? Find out the answer in our information sheet Are Binding Financial Agreements really Binding.

Have you entered into a new relationship or are you about to? If so, you should think about the provisions of your Will or what might happen after you pass away. Our information sheet How having a Binding Financial Agreement might help your Succession Planning addresses these issues.

Questions including whether you can change or update your Binding Financial Agreement and in what circumstances a court declare your Agreement invalid and set it aside, are answered in our information sheet Can a Binding Financial Agreement be set aside, updated or terminated.

Our information sheet How to tell your Partner you want a Binding Financial Agreement also contains some helpful information and suggestions.

If you are separated or divorced and need to document your property settlement agreement in a legally binding and enforceable way, our information sheet Should I use a Binding Financial Agreement or a Consent Order contains important information you should read.

 

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