Binding Financial Agreements
Certainty and control over financial arrangements—before, during or after a relationship.
Binding Financial Agreements (often referred to as “prenups” or “post‑nups”) allow parties to privately determine how property and financial matters will be dealt with, without relying on the Court.
What is a Binding Financial Agreement (BFA)?
A Binding Financial Agreement is a private contract dealing with:
how property and assets will be divided;
financial resources; and
spousal maintenance
If properly prepared, a BFA can:
exclude the Court’s jurisdiction in relation to financial matters; and
provide certainty about financial outcomes in the event of separation
When can a BFA be made?
The Family Law Act allows BFAs to be made at different stages of a relationship.
Married couples
Before marriage — s 90B
During marriage — s 90C
After divorce — s 90D
De facto relationships
Before the relationship — s 90UB
During the relationship — s 90UC
After separation — s 90UD
What can a BFA deal with?
how property and financial resources will be divided upon separation;
ownership and division of assets held before, during or after the relationship;
superannuation interests;
spousal maintenance (including excluding it entirely); and
incidental or ancillary financial matters
The legal effect and requirements of a BFA
If properly executed, a BFA:
prevents the Court from making orders about financial matters covered by the agreement;
replaces the Court’s discretionary “just and equitable” assessment under s 79 / s 90SM; and
binds the parties to the terms of the agreement, subject to limited exception
Strict legal requirements
Under s 90G / s 90UJ, the agreement must:
be in writing;
be signed by all parties;
not have been terminated or previously set aside; and
comply with the legal advice requirements.
Independent Legal Advice
This is the most critical requirement.
Each party must receive independent legal advice about:
the effect of the agreement on their rights; and
the advantages and disadvantages of entering into the agreement
Each lawyer must provide a signed certificate confirming that advice was given, which must be exchanged between the parties. Failure to properly comply can result in the agreement being declared not binding.
Financial Disclosure
Although not always expressly stated in the Act, full and frank financial disclosure is essential. A failure to properly disclose assets, liabilities or financial resources may expose the agreement to later challenge on the basis of fraud or non‑disclosure.
Strategic uses and advantages of a BFA
BFAs are commonly used to:
protect pre‑existing assets (e.g. property, inheritances)
isolate or “quarantine” specific assets
manage significant wealth disparity
protect family businesses or farming enterprises
finalise financial matters after separation
Advantages
avoids Court involvement
provides certainty and predictability
allows flexibility in structuring outcomes
can permanently exclude spousal maintenance
protects assets from future claims
Risks and limitations of a BFA
BFAs are often described as powerful but vulnerable legal instruments. Key risks include:
strict technical requirements
reliance on proper legal advice
susceptibility to later challenge
inability to account for future changes in circumstances
lack of Court oversight at the time the agreement is made
Courts scrutinise BFAs closely, particularly in cases involving:
unequal bargaining power
lack of disclosure
pressure or urgency (e.g. signing shortly before a wedding)
When can a BFA be set aside?
Under section 90K, the Court may set aside a financial agreement in specific circumstances. Key grounds include:
fraud, including non‑disclosure of material information;
the agreement being void, voidable or unenforceable;
the agreement being impracticable to carry out;
duress, undue influence or unconscionable conduct;
a material change in circumstances relating to a child, resulting in hardship; and
agreements designed to defeat creditors.
Are “prenuptial” BFAs worth it?
A prenuptial agreement (a Binding Financial Agreement made under section 90B of the Family Law Act) can be a useful tool in the right circumstances — but it is not appropriate for every situation.
A well‑prepared prenuptial agreement can provide:
certainty about how assets will be treated if the relationship ends
protection of pre‑existing assets, including property, businesses and trusts
clarity around inheritances or family wealth
reduced risk of disputes and litigation in the future
the ability to structure financial arrangements in a flexible and private way
Prenuptial agreements are often particularly useful where:
one or both parties have significantly greater assets;
there are family businesses, trusts or farming enterprises;
there are children from previous relationships; or
parties wish to protect intergenerational wealth
In practice, the value of a prenuptial agreement depends on:
how well it is prepared;
whether proper legal advice was provided; and
whether it remains appropriate in light of future circumstances
Material change in circumstances involving children
One of the most significant grounds for setting aside a Binding Financial Agreement arises where there has been a material change in circumstances relating to a child.
This is governed by section 90K(1)(d) of the Family Law Act 1975 (Cth). Under the Act, the Court may set aside a financial agreement where:
there has been a material change in circumstances since the agreement was made;
the change relates to the care, welfare or development of a child of the relationship; and
as a result, a party (or the child) would suffer hardship if the agreement is not set aside
What is a material change?
A material change is one that is substantial, significant, and not adequately addressed or contemplated at the time the agreement was made.
This is not a minor inconvenience or expected variation — it must be a real and meaningful change affecting the financial or care arrangements for a child.
In practice, this may include:
the birth of children where none were contemplated at the time of the agreement
a significant change in parenting responsibilities
a child developing special needs, disability or medical issues
a change in schooling or care arrangements increasing financial responsibility
one party becoming the primary carer unexpectedly
Courts recognise that the needs of children can fundamentally alter a party’s financial position and agreements between parties cannot operate in a way that causes hardship to children.
It is not enough to show a change in circumstances — there must also be hardship.
Practical examples
Example 1 — children not contemplated
A couple enters into a prenuptial agreement before marriage, with no children contemplated.
One party retains most of the assets under the agreement
Years later, the parties have children
One party becomes the primary carer and gives up employment
If the agreement leaves that party with insufficient resources, the Court may find:
a material change (having children); and
hardship (lack of financial support)
Example 2 — child with additional needs
A BFA is entered into without anticipating:
medical, educational or care needs of a child
If those needs arise and increase financial demands, the Court may intervene if the agreement fails to accommodate those circumstances.
Practical implications
This provision is one of the main reasons why pre‑relationship agreements (prenups) carry higher risk than post‑separation agreements.
Binding Financial Agreements require careful consideration at every stage — from the initial decision to enter into an agreement through to drafting, advice, and execution. We work closely with clients to ensure that any agreement reflects their commercial objectives while also complying with the strict requirements of the Act.
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