Understanding Your Binding Financial Agreement

A BFA is a legally enforceable contract that outlines financial arrangements between couples (married or de facto) in Australia. Sometimes called prenuptial agreements, these documents control property interests in case of relationship breakdown. They can be made before, during, or after a relationship.

These agreements are known by various names including pre-nuptial agreements (pre-nups), post-nuptial agreements (post-nups), and cohabitation agreements. Each type serves to protect your property settlement rights and superannuation entitlements.

When to Create Your Binding Financial Agreements

• If you are starting your new life together, its best to get it done before the wedding or moving in togther (that’s what we call a pre-nuptial)
• If you are already married or living together – you can still protect your future (this is a post-nuptial)
• If you are going through separation it’s not too late to make clear arrangements
• If you are recently divorced, you still have a 12-month window to sort out your finances
• If you are in a de facto relationship you can create an agreement anytime – whether you’re just moving in or have been together for years

Legal Authority of Your Binding Financial Agreement

For your financial agreement (BFAs) to stand up legally, there are some very important steps to consider:

• Everything must be in writing and signed – no handshake deals or verbal agreements
• You’ll both need to talk to your own lawyers – this ensures you understand your rights
• Your lawyers will provide special certificates – showing you’ve received proper advice
• Both of you need to be honest about your finances – hiding assets can void the agreement
• You both need to feel comfortable with the decision – no pressure or rushing
• Ensure everything follows family law requirements – cutting corners isn’t worth the risk

What Your Binding Financial Agreements Must Cover

Key areas that are typically addressed with BFA’s are as follows:

• How you’ll divide your family home and other properties
• Protecting your retirement through fair superannuation arrangements
• Whether ongoing financial support (spousal maintenance) might be needed
• Safeguarding assets you brought into the relationship
• Managing shared debts and financial responsibilities
• Preserving future inheritances for children or family members
• Protecting your business interests and livelihood

What Information Do Lawyers Need?

To create an effective BFA, lawyers will always require:

• Your work life and earnings information – helps lawyers understand your financial situation
• What you own and what it’s worth – from family homes to investments
• Your retirement savings – those super details are more important than you might think
• What you owe – loans, mortgages, credit cards
• Your relationship story – helps lawyers understand your unique circumstances
• Your family – especially if you have kids lawyers need to consider
• Any expected windfalls – like future inheritances that need protecting
• Your business life – if you’re an entrepreneur or business owner

Advantages of Your Binding Financial Agreement

A well written financial agreement offers several valuable benefits for your future:

• Peace of Mind – Know exactly where you stand financially, allowing you to focus on your relationship rather than “what-ifs”
• Asset Protection – Safeguard what you’ve worked hard for, whether it’s your family home, investments, or assets you brought into the relationship
• Smart Time and Money Management – While there’s an upfront cost, you’ll potentially save thousands in legal fees and months of stress if separation occurs
• A Court-Free Future – Avoid the emotional and financial drain of lengthy court battles by having clear arrangements already in place
• Business Security – Protect your business legacy and operations, giving you and your business partners confidence
• Family Protection – Ensure inherited assets or family gifts stay within your family line, particularly important if you have children from previous relationships
• Clear Path Forward – Having everything in writing means both parties understand their rights and obligations, reducing potential conflicts

Our Tip: While discussing finances might feel uncomfortable at first, our clients often tell us their agreement actually strengthened their relationship by creating open communication about money matters.

When Can a BFA Be Voided?

Courts can invalidate BFAs for a number of reasons, some of these are lsited below:

• If someone hasn’t been honest – hiding things is something you shouldn’t do
• Playing hide and seek with assets – courts have consistently invalidated agreements in such cases
• Trying to dodge debts – attempting to circumvent creditor obligations undermines the agreement’s legal integrity
• If corners were cut in the paperwork – details really do matter here
• Evidence of duress or coercion during execution – agreements must be entered into with free and informed consent
• If the agreement becomes impossible to follow -substantial change in circumstances rendering the agreement impracticable
• Not getting proper legal advice – this one’s non-negotiable

Our Tip: Regular reviews (every 2-3 years) help ensure your BFA remains valid and practical as your circumstances change.

What to do next?