There are ways to protect your assets in Australia’s family law system. The issue is usually that protecting your assets is only possible by consent and generally not an option after things go sour and separation occurs.

Planning is key.

Before we discuss the “protection” of assets, a brief summary on the jurisdiction of the Court is required.

The Federal Circuit and Family Court of Australia operates generally through powers given to it by way of a piece of legislation called the Family Law Act 1975. Two of the many powers they have under the legislation are section 79 and section 90SM to “alter” property owned by married parties or parties in a de facto relationship, so long as it is just and equitable.

What that means in simple terms is that the Court can split assets, whether it is a house in half, selling off a portion of a business, splitting superannuation, and that jurisdiction is conveyed on it by very specific legislation.

A Binding Financial Agreement, known as “BFAs” are the most secure form of asset protection. They are a very specific agreement made under that same legislation, that if appropriately made, takes away the jurisdiction of the Court, meaning, that a judge could not in those circumstances, divide assets that were yours because it does not have the power to.

For a BFA to be binding, the following factors must be complied with:

1. The agreement is in writing and signed by all parties;

2. Each party was provided legal advice on the effect of the agreement, and advantages and disadvantages;

3. The parties were each provided with a signed legal statement confirming that advice was given;

4. The statement is exchanged with each of the parties; and

5. The agreement has not been set aside or terminated by the Court.

If you comply with the above 5 provisions, you are likely to have a Binding Financial Agreement.

However, Binding Financial Agreements can be set aside. They are not foolproof but are, if done correctly, very secure. Some common grounds to set aside a BFA are as follows.

1. Non disclosure, where a party did not provide relevant information to the other party;

2. Duress or unconscionable conduct in the making the agreement;

3. There has been a change in circumstances due to the care of children and there will be hardship if the BFA is complied with;

4. There has been fraud, or the rights of creditors are being avoided; and

5. The agreement is void, voidable or unenforceable.