Binding Financial Agreements Explained

Prenup - Binding Financial Agreements

When considering marriage or entering into a de facto relationship, a Binding Financial Agreement (“BFA”), sometimes known as a ‘pre-nup’, can be a practical and effective way to safeguard your assets and avoid the potential emotional and financial cost of a relationship breakdown. But what makes BFAs contractually binding and can they be overturned by a judge? Read the important basics here.

What is a Binding Financial Agreement?

In a nutshell, a BFA is a private contract between two people, including same-sex partners that formalises how a couple’s property, assets, superannuation and liabilities will be divided in the event of a breakdown of a marriage or a de facto relationship. Once parties enter into a BFA, they give up their rights under the Family Law Act (FLA) for the Family Court to determine any or all property and financial matters should their relationship end.

Couples can enter into a BFA:

  • Before getting married (a pre-nuptial agreement, commonly referred to as a “pre-nup”) or before entering into a de facto relationship;
  • While married or during a de facto relationship;
  • During a separation but before filing for a divorce; or
  • After a divorce or the breakdown of a de facto relationship.

In compliance with specific provisions set out under the Family Law Act, BFAs are deemed to be binding if:

  • The Agreement is signed by both parties.
  • Before signing the Agreement, each party was provided with independent legal advice about the effect of the Agreement on their rights, as well as the advantages and disadvantages of making the Agreement.
  • After signing the Agreement, each party was provided with a signed statement by their lawyer confirming that advice was provided.
  • Signed copies of the two lawyers’ statements are exchanged between the parties.
  • The Agreement has not been terminated or set aside by the court.

Can a court set aside Binding Financial Agreements?

BFAs can be set aside by the Family Court if they are not carefully drafted and properly executed. The most common reasons BFAs are set aside are because:

  • The Agreement was obtained by fraud or duress (for example, requiring someone to sign the BFA shortly before the parties’ wedding under threat of not going through with the wedding).
  • A party failed to disclose assets or information relevant to the Agreement.
  • The Agreement was entered into to defeat or defraud a creditor or with reckless disregard to the interest of a creditor.
  • There have been significant changes to either or both parties’ circumstance which makes it impractical to carry out the set Agreement.
  • Since the making of the Agreement, there has been a change in circumstances relating to a child, and it would result in hardship for the child or their carer if the Agreement is not set aside.

If the Agreement is set aside, then each party is free to apply to the court for a property settlement, like any other separated couple.


While we all hope for ‘happily ever after’, relationships can sometimes break down. The lengthy court battles, emotional and financial stress that can ensue often prompt couples to consider making a BFA in advance. It can be a particularly cost-effective way to protect the assets you’ve worked hard to earn; protecting your future income or inheritance; making sure you (and any children) are adequately looked after financially if the relationship doesn’t end amicably.

However, it’s important to bear in mind that BFAs are complex contracts and require specialised family law advice. Significant expertise is required by the lawyer to satisfy his/her duty under the Family Law Act to ensure the BFA is actually binding. Whatever you do, you should not retain a lawyer to draft or advise you on a BFA based on how much they charge. You must ensure they specialise in Family Law and have experience in drafting BFAs. Unfortunately, it is all too common that a BFA is set aside by the court because of poor drafting or inaccurate advice. Each BFA must be highly tailored to the individual parties involved and, as such, foresight and strategic advice is required by the lawyer drafting and/or advising on the document.

At Taylor & Scott we have experience in drafting and advising on all aspects of BFAs, including documents to vary or terminate existing BFAs. We do so almost invariably whilst prudently utilising barristers’ advice, offering an extra layer of security and peace of mind to clients. The importance of getting a BFA right the first time cannot be stressed enough.

If you or someone you know needs expert advice from our specialist team of family lawyers, phone us on 1800 600 664 or complete the contact form on this page.

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