Does a Binding Financial Agreement Override a Will in Australia?

You’ve planned for the future, signed all the paperwork, and feel secure knowing your assets are in order.

But wait—what happens if your Binding Financial Agreement (BFA) and your will say different things? Does one automatically trump the other? This is where things can get complicated. Understanding how these two legal documents interact is crucial to ensuring your wishes are followed without disputes. In this article, we’ll break down whether a BFA overrides a will, what the law says, and how you can prevent unwanted surprises.

Key Takeaways

A Binding Financial Agreement (BFA) does not automatically override a will.
BFAs govern property division during separation, while wills distribute assets upon death.
Conflicts between a BFA and a will may lead to legal challenges.
Proper estate planning ensures both documents work together harmoniously.
Seeking legal advice can help avoid unintended consequences.

Understanding Binding Financial Agreements and Wills

What is a Binding Financial Agreement (BFA)?

A Binding Financial Agreement (BFA) is a legally enforceable contract between couples that outlines how assets and liabilities will be divided in the event of a separation or divorce. BFAs can be signed before, during, or after a relationship, allowing couples to determine their financial future without court intervention.

What is a Will?

A will is a legal document that dictates how a person’s assets will be distributed after their death. It ensures that property, finances, and possessions go to the intended beneficiaries rather than being decided by intestacy laws.

The Key Difference

While both documents deal with financial matters, BFAs handle property division during a breakup, whereas wills dictate inheritance upon death. The potential conflict arises when a BFA and a will contradict each other, leading to legal challenges.

When a Binding Financial Agreement Affects a Will

Can a BFA Influence Asset Distribution After Death?

Yes, but with limitations. A BFA is a contractual agreement and can impact what assets are available in an estate. If the deceased had previously agreed in a BFA to transfer specific assets to their ex-partner, those assets may no longer form part of the estate for distribution under the will.

When Conflicts Arise

If a will and a BFA contradict each other, the court may need to step in. For example:

If a BFA states that one partner will receive a property upon separation, but the will leaves that same property to a child, a dispute can arise.
If an ex-spouse named in a BFA makes a claim on an estate, courts will examine whether the claim holds weight under succession laws.

“Just because a BFA exists doesn’t mean a will is irrelevant—but it does mean you should ensure they don’t contradict each other.”

Can a Will Override a Binding Financial Agreement?

The short answer? No, a will cannot override a BFA in terms of property division agreed upon while both parties were alive. However, there are ways a will can still influence the overall estate distribution:

If a BFA fails to consider all assets, those leftover assets will be distributed according to the will.
Family members can contest a will if they believe they have been unfairly left out.
If a BFA is found to be legally invalid, the court may disregard it.

How to Ensure Your BFA and Will Work Together

To avoid disputes, follow these key steps:

Keep Both Documents Updated – Regularly review and align them with your wishes.
Include Clear Instructions – Explicitly state intentions regarding property division.
Seek Legal Advice – Consult a family lawyer and estate planner.
Consider Testamentary Trusts – A strategy to control asset distribution.
Avoid Conflicting Terms – Ensure both documents complement each other.

Real-Life Scenarios: When a BFA and Will Clash

Scenario 1: The Forgotten Property

John and Lisa signed a BFA stating Lisa would receive their holiday home if they separated. Years later, John passed away, and his will left the holiday home to his brother. Lisa challenged the will, arguing that the BFA took precedence. The court ruled in Lisa’s favour because the agreement was legally binding before John’s death.

Scenario 2: The Contested Estate

Michael’s will left everything to his children, but his ex-wife had a valid BFA, entitling her to a portion of his assets. Michael’s children contested the estate, arguing the BFA should not apply after his death. The court upheld the BFA, limiting the children’s claims.

Scenario 3: The Invalid Agreement

Samantha and James had a BFA, but it was drafted without independent legal advice. Upon James’s death, his family contested the agreement, and the court found it invalid, allowing the will to take full effect instead.

Conclusion

A Binding Financial Agreement does not automatically override a will, but it can significantly impact estate distribution. Ensuring both documents align is crucial to preventing disputes and protecting your assets.

For expert legal advice tailored to your situation, reach out to Testart Family Lawyers. Our experienced team can help you create a legally sound financial plan that safeguards your future. Don’t leave your estate to chance—get in touch today!