In doing so, and under Sections 79 and 75 of the Act, the laws permit the parties’ properties to be redistributed by taking into account the following factors:
1. The size of the asset pool, which includes:
a. All properties and assets belonging to the parties;
b. All properties and assets to which the parties contributed in acquiring, even if they legally belong to someone else;
c. All financial entitlements such as under a will, trust beneficiary arrangements etc
2. The parties’ financial, and non-financial contributions to the marriage/de factor relationship; and
3. The time and manner of the acquisition of the properties in the asset pool.
Property settlement could be completed through either a BFA or through a consent order made by the court, albeit the latter could only be done when the marriage/de facto relationship breaks down.
A BFA is a formal, albeit private, agreement by the parties to deal with their financial affairs. If executed properly, it is legally binding just like court orders. It requires each party to retain independent legal advice, and their solicitors must certify that advice had been properly given before the BFA becomes binding.
A BFA could be executed:
- Before the commencement of the marriage/ de facto relationship, whereby it could contemplate how properties are to be distributed (if at all) if the marriage/de facto relationship eventually breaks down; or
- During the marriage/de facto relationship, but before the breakdown of the said marriage/de facto relationship, whereby it could, again, contemplate how properties are to be distributed (if at all) if the marriage/de facto relationship eventually breaks down; or
- During the marriage/de facto relationship, but after the breakdown of the said marriage/de facto relationship, whereby it would set out how properties are to be distributed;
- After the marriage/de facto relationship, whereby it would set out how the properties are to be distributed.
In order for the BFA to be binding, it must be executed in compliance with the Act, amongst of which one of your most essential obligation is frank and complete disclosure of all:
- Properties and assets;
- Properties and assets to which you contributed in acquiring, even if they legally belong to someone else; and
- Financial entitlements such as under a will, trust beneficiary arrangements etc
If you do not make the above disclosure, the BFA could be set aside by the other party, and will lose its legal effect and any protection it may have in your favour.
Death and BFA
As at the time of this letter, and under the Act, death does not invalidate the BFA. In fact, death is not deemed to be a form of separation, and does necessarily trigger the operation of the BFA. Should this happen, the laws of succession will take precedent.
In this regard, if either of the parties passes away intestate (that is, without a will), the rules of intestacy states that all the assets of the deceased will be transferred to his/her spouse, subject to any Family Provisions applications.
Hence, parties should consider preparing a will in conjunction with a BFA to afford holistic protections to his/her assets.
The BFA could be set aside
Despite the BFA being a legally binding and enforceable instrument, it is possible for a BFA to be set aside – that is, to be made invalid, and to lose its legal effects.
A party will always be entitled, even if the BFA is executed in a compliant manner, to apply to an appropriate court to have the BFA set aside. The success of such applications will depend on the circumstances applicable at the time.
While we understand that it is most people’s intention for the BFA to provide guaranteed protection, this was not the intended purpose of the Act, and that if the circumstances permit, the BFA could very well be set aside.