After a divorce, married couples must come together to decide how to split their property and understand the cost of binding financial agreements, as well as organise spousal maintenance if necessary. Binding financial agreements are one way to help you do that. But are they right for you? An important factor influencing that decision is the cost of the process.
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In this article, we’ll examine the cost of a binding financial agreement. This will help you decide whether it’s right for your circumstances.
TL;DR
Binding financial agreements (BFA) can vary in cost from around $3000 to $10,000. Family law firms typically offer BFAs through a fixed fee service. The wide range of prices is due to complications that may arise during the agreement. There are ways you can manage the rate of a BFA. These include accurately disclosing your finances and choosing the best lawyer to get tailored advice.
Cost of binding financial agreement breakdown
Here are approximate expenses you can expect when organising a BFA.
Item | Cost |
Fixed-rate BFA | ~$1500-$3000 |
Valuation report | ~$2000 |
Superannuation information request | ~$170 |
Asset valuation | ~$200/per hour |
Mediation sessions | ~$500/per hour |
Key takeaways
A binding financial agreement is a legally binding agreement that sets out how a marital property pool will be divided after a divorce. The Family Law Act covers these agreements. BFAs can be entered at any time. If they’re created before a marriage, they’re often called prenuptial agreements. Individuals can create a BFA before, during or after a relationship ends. The arrangement can cover investment pools of various levels of complexity. BFAs are crucial to the health of each party’s financial interests.
Requirements for a Binding Financial Agreement
Binding financial agreements must meet strict legal requirements in Australian law. The legal framework is governed by the Family Law Act.
Voluntariness
Both individuals must enter the agreement voluntarily. There cannot be any duress, undue influence or coercion. Each spouse must also get independent legal advice from an expert family lawyer before entering the existing agreement.
Full Financial Disclosure
Both individuals must disclose their full financial position. This means providing information on property, liabilities and other financial resources you can access. This is important because it allows each party to understand the investment pool accurately.
Certification of Independent Legal Advice
BFAs aren’t approved by the Court. But both spouses must receive advice independently from a qualified binding financial agreement lawyer. This legal representation goes into how the agreement affects each party’s rights and interests. Once the lawyer has advised them of the agreement’s merits, they will issue a certificate confirming their client received the advice.
Deadline
There isn’t a strict time limit for BFAs. Financial orders generally need to be started within a certain time, which is:
Married couples. Within 12 months of finalising the divorce.
De facto couples. Within 2 years of the separation date.
BFAs aren’t tied to these deadlines. However, it’s generally better to get your agreement in writing sooner rather than later.
The binding financial agreement cost
The cost of binding financial agreements depends on many variables. Legal fees can amount to anywhere from $3000 to $10,000 on average. Many firms offer a fixed fee for organising a binding financial agreement. This broad range shows you how much can affect the price.
Agreement complexity
Some investment pools are extremely complex. There are certain circumstances where you may need specialised knowledge to divide properly.
Valuation Challenges
Business interests are often part of property settlements. Business owners usually want these interests to be treated in very particular ways. This may require assistance from accountants and other professionals to work out.
They’ll examine the business’s cash flow, market conditions and financial statements. Think about a business’s goodwill. While abstract, goodwill can carry a lot of value. This will all add considerable cost to a binding financial agreement. A comprehensive valuation report can cost $2000 or more.
Superannuation
Superannuation interests need to be valued accurately before they’re included in financial arrangements. Superannuation splitting laws tell you how superannuation should be managed in property settlements. Improper disclosure or bad valuations can cause big problems. It can lead to a BFA getting overturned in court because of unconscionable conduct.
Submit a Form 6 Declaration to the superannuation trustee. This proves that the applicant has a right to the information. This is accompanied by a Superannuation Information Request Form. The information request often has a fee of about $170.
Organising information on super interests can be time-consuming and add to the cost of a BFA.
Unique and Rare Assets
Unique items like collectibles can be tricky. Getting a good valuation is sometimes easier said than done.
Their market value can often be subjective. Two experts may give a different value for the same property. If these items form part of the investment properties pool, lawyers will work with specialist appraisers to determine their market value.
A valuation specialist’s services are often expensive due to the specific nature of their expertise. Be careful about how the valuer manages their fee structure. Some valuers might set their fee based on a percentage of the asset’s value. This is a conflict of interest. Fees should be fixed or at an hourly rate.
This procedure is often complex and expensive. The rate is often based on the number of assets being valued. An hourly rate can be set at around $200.
Cryptocurrencies
Cryptocurrencies have exploded in popularity. The total market capitalisation of all cryptocurrencies is over $3 trillion. As a result, they’re popping up more and more in financial agreements.
However, they can be complicated and expensive. The value of cryptocurrencies changes quickly. It’s important to consider at what point in time you value the cryptocurrency. However, assigning a fair dollar value to you and the other party is tricky.
Tracking down cryptocurrencies is also a problem. Cryptocurrencies are decentralised. There’s no authority that the Family Court can subpoena to get information about them.
Complex Ownership Structures
Some assets may be held within complex ownership structures. These could be assets like family trusts or corporate entities. This is where other areas of law could come in. You may need advice on corporate law and trust law to handle those assets.
Disclosure requirements
Completing your disclosure requirements is vital. It can also be very complicated and costly. This will depend on what you need to do.
Gathering Financial Information
Gathering this information can be lengthy, especially if the individuals have a complicated relationship. There could be multiple accounts to deal with or jurisdiction problems if the asset is overseas. Disclosure during a separation can also involve other professionals. You might need accountants and valuation experts. This is going to increase the complexity and cost of the procedure.
Negotiations and Revisions
Once all assets and liabilities are on the table, you’ll likely need a lot of negotiation to settle on a division. You could even need to go through multiple rounds of discussion to get to the bottom of disagreements. The amount of time it takes to sort things out can lead to higher legal costs. This will come down to how willing the parties are to find agreement and how complex the situation is.
Verification and valuation
Family lawyers may need to verify the accuracy of your financial information. This can be important to protect assets and make sure everything is handled transparently. But it can be time-consuming. Anything that increases the time and work involved will add to the cost. Talk about these needs at an initial consultation so you know what information you’ll need. It’s also useful to know how to approach challenges from the other party.
Managing expenses
Even with simple BFAs, expenses can get out of hand quickly. But parties can manage the expense.
Clear Communication
You need to be able to communicate well to get an agreement. What are your financial goals and future needs? Hashing these things out ahead of time will make drafting the agreement easier. Avoiding lengthy negotiations later on is good.
You should also communicate with your lawyer. Their services can make the process clearer and keep the cost down as much as possible.
Define Objectives and Priorities
What do you want to achieve? Consider what assets should be included and how they’ll be treated. It’s important to know how debts will be handled, too. You don’t want to be saddled with expenses unfairly. When you’re both clear on the objectives, the negotiations will be a lot more productive.
Choose the Right Lawyer
Hire a family lawyer who has experience drafting BFAs. Their practical approach to the agreement will keep expenses down. Look for someone who offers transparent fee structures. Many lawyers offer fixed fees for BFAs. Other qualities may include:
Negotiation skills
Some lawyers could be better during negotiations than others. Negotiations should stick to practical solutions. A lawyer can set out actionable steps for the parties to take.
Professional collaboration
You might need a forensic accountant or tax professional to help. A good lawyer knows who can be trusted to provide the right service. They often have a network of people they work with regularly.
Consider Alternative Dispute Resolution
Disputes are common during negotiations. How you handle them will determine a lot about how much you could end up paying. Mediation should be your first option. It tends to be much more cost-effective than litigation. Going to court is stressful enough. But going through extended hearings over months can hurt your bank account. Do everything you can to get the most out of dispute resolution.
Be flexible
You won’t get far without a willingness to compromise. Keep your own best interests in mind. But also consider what your former partner. There could be creative solutions. For example, compromising on one asset to get another with more sentimental value could work. Make sure everyone’s open about the finances being discussed. This is crucial to building trust.
Interests over positions
Don’t approach mediation as if it’s something you need to win. It’s more about identifying shared goals and how you’re going to get there. If you’re intent on using a BFA to retaliate against your ex-partner, the agreement’s more likely to fail. Discussions should be about satisfying each person’s interests. Financial agreements don’t need to be a zero-sum game. Both parties can get a fair agreement if they’re willing to work together.
Focus on the future
BFAs are about your future. It’s not a time to get revenge about past issues. It may be difficult to manage your emotions during negotiations. That’s normal. Concentrate on practical steps to get the right agreement.
Approaching disputes in this way helps to streamline negotiations and keep expenses down.
Is a BFA right for you?
BFAs aren’t the best option for everyone. Here are situations where a BFA may not be such a good idea:
Power imbalance. Some spouses have power over their partners. That could be because they’re wealthier or have more legal knowledge. That could lead to unequal agreements
Small asset pools. BFAs are one of the more expensive ways to divide assets. Smaller investment pools would benefit from a lower expense solution, such as a consent order.
Legal protections. BFAs are more susceptible to legal challenges than a court order. A consent order can give you more peace of mind that the agreement will hold up.
From our clients
I can’t express enough how grateful I am to Andrews Family Lawyers for not only taking on what should have been a straightforward division of assets divorce case, but also for taking the risk financially to support me when the case dragged on.
– Richard Taylor
I cold called Andrews Family Lawyers because they were a local firm and I can highly recommend them! Peter and Lisa provide personalised professional legal services. They were very easy to deal with and they keep you up to date with where processes were at and achieved the desired outcomes in a timely manner. They always returned phone calls in a timely manner. I can’t recommend them enough!!
– Bronwyn Stevens
Conclusion
Cost of binding financial agreement is flexible. They can fit into any party’s specific circumstances. You can enter a BFA during or after a relationship breakdown. There can be a lot that goes into them that may be costly, for example:
Complex assets.
Valuations.
Working with professionals like accountants.
Receiving independent legal advice.
Extended negotiations.
Good communication and an experienced family lawyer can help keep the cost of a binding financial agreement down. You’ll get a lot of benefit out of the right legal guidance, such as:
Competent negotiation skills.
Thorough disclosure.
In-depth advice.
Transparent fees.
Streamlined process to save on costs.
You could be married or in a de facto relationship. You still have a right to a clear agreement with effective legal help.
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Are you looking for a legal team with extensive experience? That’s your sign to come speak with us. We can help you through major changes in your life, like separation and divorce. Contact us today to talk to one of our solicitors.
