Are you considering marriage, living together, or going through separation? A Binding Financial Agreement (BFA) could be your most important financial decision. This comprehensive guide covers everything you need to know about Binding Financial Agreements in Australia, from costs and requirements to when they can be challenged.
What is a Binding Financial Agreement?
A Binding Financial Agreement is a contract between two or more parties made under Part VIIIA (for marriages) or Division 4 of Part VIIIAB (for de facto relationships) of the Family Law Act 1975. Often called a “pre-nup” or prenuptial agreement, a BFA is a document or series of documents that govern your property interests in the event of a separation during a marriage or a de facto relationship.
Key Benefits:
- Avoid costly court proceedings
- Protect assets acquired before the relationship
- Provide certainty about financial arrangements
- Reduce conflict during separation
- Protect business interests and inheritance
Types of Binding Financial Agreements
A BFA can be entered into before, during or after a relationship. The three main types are:
1. Pre-Relationship Agreements (Pre-nups)
- Made before marriage or moving in together
- Protects assets you bring into the relationship
- Most common and strongest type of BFA
2. During Relationship Agreements
- Made while married or in a de facto relationship
- Can address changes in circumstances
- Useful when acquiring new assets
3. Post-Separation Agreements
- Made after separation but before divorce
- If made after marriage, the binding financial agreement must be made within twelve months of an order of divorce
- Formalises agreed property settlement
Who Needs a Binding Financial Agreement?
You should strongly consider a BFA if you:
- Have significant assets, property, or savings before the relationship
- Own a business or professional practice
- Expect to receive an inheritance or family gifts
- Have children from a previous relationship
- Want to protect family assets or trusts
- Earn significantly more than your partner
- Have complex financial structures (trusts, companies, self-managed super funds)
- Want to avoid potential costly legal disputes
Real-World Scenarios:
- Sarah owns a $2 million property development business before marriage
- John expects to inherit the family farm worth $3 million
- Lisa has three children from her first marriage and wants to protect their inheritance
- Mark owns shares in a family company and needs to protect other shareholders
Legal Requirements for Binding Financial Agreements
To be binding, a Financial Agreement must meet certain technical requirements, which are set out in sections 90G (for Financial Agreements about marriages) and 90UJ (for Financial Agreements about de facto relationships) of the Family Law Act 1975.
Mandatory Requirements
1. Independent Legal Advice It is mandatory to get independent legal advice before entering into a Financial Agreement. Both parties must:
- Use separate lawyers (you cannot share the same lawyer)
- Receive advice about the agreement’s effects on their rights
- Have their lawyer sign a certificate confirming advice was provided
2. Full Financial Disclosure Both parties must provide complete and honest disclosure of:
- All assets and property
- Debts and liabilities
- Income and financial resources
- Superannuation interests
- Trust interests or business ownership
- Expected inheritances
3. Written Agreement The agreement must be in writing and signed by the parties, with proper witnessing as required.
4. Free Will and Understanding Each party must enter the BFA of their own free will and be fully informed about its implications.
Important Note: The Family Law Amendment Act 2024 introduced significant changes to the framework for resolving property and financial aspects of relationship breakdown, with most changes commencing on 10 June 2025.
How Much Does a Binding Financial Agreement Cost?
The cost varies significantly based on complexity, but here’s what to expect:
Standard Agreements
Legal fees can amount to anywhere from $3000 to $10,000 on average for both parties combined. For a standard agreement, you can expect prices to start from around $5,500 per person.
Complex Agreements
If your circumstances involve financial entities such as trusts, companies, or unique arrangements, the cost can increase to anywhere between $15,000 and $20,000 total.
Cost Breakdown
- Drafting the agreement: $2,000 – $8,000+
- Independent legal advice per person: $500 to $1,500 per person
- Asset valuations: $500 – $5,000+ (if required)
- Financial advice: $1,000 – $3,000 (optional but recommended)
Factors Affecting Cost:
- Complexity of assets (multiple properties, businesses, trusts)
- Number of revisions needed
- Urgency of timeline
- Experience level of lawyers
- Need for specialist valuations
Cost-Effective Options
Some services offer comprehensive BFAs including legal advice for both parties from around $2,940, though these are typically for simpler arrangements.
What Can Be Included in a Binding Financial Agreement?
Financial Matters:
- Division of property and assets
- Superannuation splitting
- Spousal maintenance arrangements
- Debt allocation
- Business interests
- Inheritance protection
Specific Assets:
- Real estate (family home, investment properties)
- Bank accounts and investments
- Vehicles, boats, and personal property
- Art, jewelry, and collectibles
- Cryptocurrency and digital assets
- Intellectual property
Future Considerations:
- How new assets will be treated
- Arrangements if children are born
- Career sacrifices and earning capacity
- Insurance policies and benefits
Note: BFAs cannot deal with parenting arrangements or child support – these require separate agreements.
How Mediation Can Help with Binding Financial Agreements
Mediation is crucial for successful BFAs because it:
Reduces Conflict
Professional mediation helps couples discuss sensitive financial matters constructively, reducing the likelihood of disputes that could later invalidate the agreement.
Ensures Fair Outcomes
In recent years the Court has also made it clear that Financial Agreements need to be a fair and reasonable bargain between the parties to the Financial Agreement. Mediation helps achieve this fairness.
Improves Communication
Open dialogue through mediation ensures both parties understand the agreement fully, reducing chances of successful challenges later.
Cost-Effective Process
Mediation is typically more efficient and cost-effective than litigation, and it avoids the stress of attending court.
At Mediations Australia, our experienced family lawyers and mediators guide couples through the BFA process with sensitivity and expertise. We ensure your agreement is properly structured, legally compliant, and protects both parties’ interests.
When Can Binding Financial Agreements Be Challenged?
While BFAs are designed to be binding, the Court has power to set aside Financial Agreements in some circumstances, which are set out in sections 90K (for Financial Agreements about marriages), and 90UM (for Financial Agreements about de facto relationships) of the Family Law Act 1975.
Grounds for Setting Aside a BFA
1. Fraud or Non-Disclosure One of the most common grounds for overturning a BFA is fraud, which can include non-disclosure of assets or income, or providing false information about financial matters. Examples include:
- Hidden bank accounts or properties
- Undisclosed business interests
- Concealed debts or liabilities
- False asset valuations
2. Unconscionable Conduct A party’s conduct in the making of the BFA was, in all the circumstances, unconscionable. This includes:
- Undue influence or pressure
- Signing under duress
- Significant imbalance in bargaining power
- Last-minute pressure (e.g., demands to sign days before wedding)
3. Lack of Independent Legal Advice One of the key requirements for a binding financial agreement is that both parties must receive independent legal advice from separate lawyers before entering into the agreement. If this requirement isn’t met properly, the agreement may be invalid.
4. Material Change in Circumstances Since the making of the BFA, a material change in circumstances has occurred (relating to the care, welfare and development of a child of the relationship) and, as a result of the change, a party to the agreement will suffer hardship if the Court does not set the BFA aside.
5. Agreement is Void or Unenforceable The agreement is void or unenforceable (e.g. due to mistake, public policy, misrepresentation, one party was under duress at the time of execution, there has been a breach of the agreement or unconscionable conduct).
Notable Case Law: Thorne v Kennedy
The High Court of Australia decision of Thorne & Kennedy [2017] cast a spotlight on the ability of Binding Financial Agreements to be set aside. In this case:
- A wealthy Australian man married a younger foreign woman
- The woman had limited English, no family support in Australia
- She was pressured to sign agreements just before the wedding
- The High Court found the agreements could be set aside for unconscionable conduct
Key Lessons:
- Both parties having legal advice isn’t always enough
- Timing and circumstances of signing matter
- Significant inequality in bargaining power is a red flag
- Rushed agreements are vulnerable to challenge
How to Create an Ironclad Binding Financial Agreement
The easy steps to take to ensure your Financial Agreement is ironclad include the following: Making sure that both parties are represented by competent lawyers; Making sure that the Financial Agreement complies properly with the requirements of the Family Law Act; Ensuring that both parties undertake full and frank disclosure including valuations; and Ensuring that the Financial Agreement is prepared in an orderly fashion and not rushed.
Best Practices for Strong BFAs
1. Allow Sufficient Time
- Start discussions months before wedding/moving in
- Don’t rush the process
- Allow time for proper negotiation and consideration
2. Ensure Full Disclosure
- Provide complete financial statements
- Get professional asset valuations
- Disclose all business interests and trusts
- Include potential future inheritances
3. Make It Fair and Reasonable A one-sided Financial Agreement may therefore be difficult to uphold in the Court when challenged. Consider:
- Some payment to the less wealthy party
- Provisions for children’s needs
- Reasonable timeframes for property changes
- Consideration for career sacrifices
4. Use Experienced Professionals
- Engage specialist family lawyers
- Consider mediation to resolve disputes
- Get independent financial advice
- Use qualified property valuers
5. Regular Reviews
- Review agreements when circumstances change
- Consider updates when children are born
- Reassess after major asset acquisitions
- Update if business interests change
Alternatives to Binding Financial Agreements
Consent Orders
Consent orders are proposed orders which you and the other party agree on and ask the Court to formalise as court orders. Key differences:
- Made after separation
- Court-approved and harder to challenge
- Can include parenting arrangements
- Less expensive than BFAs
- More limited flexibility
Informal Agreements
Simple written agreements without court involvement:
- Not legally binding
- Cheaper but riskier
- Cannot transfer property titles
- May not be enforceable
- Suitable only for simple arrangements
The BFA Process: Step-by-Step Guide
Step 1: Initial Consultation
- Discuss your needs with a family lawyer
- Understand costs and timeline
- Consider mediation if needed
Step 2: Financial Disclosure
- Complete full financial disclosure
- Gather asset valuations
- Prepare income statements
- Disclose all liabilities
Step 3: Negotiation and Drafting
- Negotiate terms through lawyers
- Draft initial agreement
- Review and revise as needed
Step 4: Independent Legal Advice
- Each party consults their own lawyer
- Receive advice on rights and obligations
- Lawyers provide certificates of advice
Step 5: Execution
- Both parties sign the agreement
- Ensure proper witnessing
- Store securely with important documents
Common Mistakes to Avoid
1. Inadequate Disclosure Hiding assets is the quickest way to have your BFA overturned. In Black v Black, the husband failed to disclose significant overseas assets when entering into a BFA. When the wife discovered this omission, she applied to have the BFA set aside on the grounds of fraud.
2. Rushing the Process Last-minute agreements are vulnerable. Allow months, not days, for proper consideration.
3. One-Sided Agreements Extremely unfair agreements are more likely to be challenged successfully. Ensure some benefit for both parties.
4. Poor Legal Advice Using inexperienced lawyers or not getting proper advice can invalidate the entire agreement.
5. Not Updating Agreements Life changes – update your BFA when circumstances significantly change.
Frequently Asked Questions
Can we use the same lawyer for our BFA? No. Australian law requires each party to receive independent legal advice from separate lawyers for the agreement to be legally binding.
What happens if we don’t have a BFA and separate? If your relationship ends, and you do not have a legal BFA, then you and your former partner/spouse will need to negotiate a property settlement of applying to the Family Court to make a determination.
Can a BFA be overturned? It’s possible, but only under specific circumstances such as fraud, duress, or if the agreement becomes impractical due to significant life changes.
How long does the BFA process take? Typically 6-12 weeks for simple agreements, longer for complex arrangements. Don’t rush – proper preparation is crucial.
Do we need asset valuations? For significant assets, yes. Professional valuations provide clarity and reduce disputes about asset values.
Can we include superannuation? Yes, BFAs can address superannuation splitting arrangements, though special rules apply.
Why Choose Mediations Australia for Your Binding Financial Agreement
At Mediations Australia (www.mediationsaustralia.com.au), we understand that creating a Binding Financial Agreement is about more than legal compliance – it’s about protecting your future while maintaining your relationship.
Our Services Include:
- Comprehensive BFA drafting and advice
- Independent legal advice certificates
- Pre-agreement mediation to resolve differences
- Asset protection strategies
- Regular agreement reviews and updates
- Fixed-fee arrangements available
Why Families Choose Us:
- Experienced family law specialists
- Sensitive, non-confrontational approach
- Competitive pricing with transparent costs
- Offices across Australia
- High success rate with enforceable agreements
- Free initial consultations available
Our experienced team has helped thousands of Australian couples create comprehensive, legally sound Binding Financial Agreements that protect their assets and provide peace of mind.
Take Action: Protect Your Financial Future Today
Don’t leave your financial security to chance. Whether you’re planning marriage, already in a relationship, or facing separation, a properly drafted Binding Financial Agreement can save you thousands in legal fees and provide invaluable peace of mind.
Contact Mediations Australia today for:
- Free initial consultation
- Fixed-fee quote for your circumstances
- Expert legal and mediation services
- Comprehensive asset protection advice
Remember: The best time to create a BFA is before you need it. The cost of a properly drafted agreement is minimal compared to the potential costs of separation disputes.
For more information about property settlement and related services, visit our comprehensive guides on Property Settlement Mediation and Consent Orders.
This guide provides general information about Binding Financial Agreements under Australian law. Every situation is unique, and you should seek professional legal advice specific to your circumstances. Contact Mediations Australia at www.mediationsaustralia.com.au for personalised guidance.
