When two people are about to enter into a relationship, one of them may decide that a Binding Financial Agreement (BFA) should be drawn up to protect them from financial loss should the relationship fail. Family lawyers are needed to give advice to both parties involved and explain exactly what the terms of the agreement mean.
While such an agreement can be entered into at any time – before, during or after the relationship, it is best to do it beforehand or even during the relationship while both parties are happy. To be fair, there should be input from both parties, although this often does not happen. While there are advantages to having a BFA, there are also a few disadvantages.
- If it is drawn up before or even during a relationship, it can cause division if one party draws it up to suit themselves without any consultation with their partner. It can certainly make that person feel the other one does not trust them, or is about to leave the relationship. In fact, it would even seem that their partner is preparing for failure in the relationship rather than working towards establishing a relationship that is strong enough to last the tests of time.
- No court or any other regulatory body gets to examine the details of the BFA. It can be drawn up in any way the person doing it deems fit, whether or not it is fair and just to the other person.
- There is no registration system to record that a BFA has been entered into.
- Only the two people in the relationship can enter into a BFA; no third party can be in it.
- The details set out in the BFA can be extremely complex and must cover many different situations. Therefore, it is best done be a qualified and experience family lawyer. Each person involved must have legal instruction on the details and what they entail before signing the agreement. This can be quite a costly procedure.
- There are still some circumstances or situations in which the BFA could be set aside, depending on how the courts interpret the law regarding a specific situation.
While people who are wealthy, or who have been divorced before and lost a great deal financially at the settlement can see the need for a Binding Financial Agreement, those at the other end of the spectrum are not so likely to worry about finances or see the need to have one.
It is up to each person individually to consider whether they should have one and to talk it over with their partner or spouse beforehand to see what they think. To just draw one up and expect the other to sign on the dotted line without any discussion is likely to make them feel betrayed – and that is not a good start for any relationship.