A Binding Financial Agreement (BFA) is an important legal instrument designed to formalise the division of financial interests and property between separating partners. If you are in the process of separating from your spouse or partner, it is crucial to consider entering into a BFA to clearly outline the division of assets and responsibilities. This blog post will explain what a BFA is, its significance, and the steps you need to take to ensure your estate planning reflects your current circumstances.
What is a Binding Financial Agreement?
A BFA is an agreement made between separating partners to finalise their property and financial matters. Under the Family Law Act, a BFA can bind the estates of both married and de facto couples. However, it is essential to understand that family courts generally do not have jurisdiction over a person’s affairs after their death. This means that a BFA cannot necessarily prevent a family provision claim or challenge to an estate after one party passes away.
Why is a BFA Important?
Even though a BFA might not completely prevent claims against your estate, it plays a critical role in estate planning for separated couples. When properly executed, a BFA is considered by the courts if your former spouse or partner challenges your estate after your death. The agreement demonstrates your intentions regarding the division of assets, which can influence the court’s decision.
Key Considerations for Estate Planning Post-Separation
Review Your Will: Your separation does not automatically revoke any bequests made to your former spouse in your existing Will. It is vital to update your Will to reflect your current circumstances and intentions.
Superannuation Death Benefit Nominations: Assess and update your superannuation death benefit nominations to ensure they align with your current wishes. This includes reviewing any trust deeds that name your former spouse as a trustee, appointor, or primary beneficiary.
Seek Legal Advice: Consulting with a legal professional can provide clarity and ensure that all legal and financial aspects of your separation and estate planning are comprehensively addressed.
Action Items
Update Your Will: Ensure that your Will accurately reflects your current wishes and removes any unintended bequests to your former spouse.
Review Superannuation and Trust Deeds: Make necessary changes to your superannuation death benefit nominations and any relevant trust deeds to remove your former spouse, if applicable.
Consult a Legal Professional: Engage with a legal advisor to assist with updating your BFA, Will, and other estate planning documents.
By taking these steps, you can ensure that your financial affairs and estate planning accurately reflect your current circumstances and intentions, providing peace of mind for you and your loved ones.
Start Your Estate Planning Journey at Inherit Australia
Start your estate planning journey today with Inherit Australia. Our platform offers comprehensive tools and expert guidance to help you navigate the complexities of estate planning and ensure your wishes are clearly documented and respected. Visit Inherit Australia to get started.
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