Getting married is an exciting milestone, but it also comes with financial realities that are worth planning for. A prenuptial agreement, officially known as a Binding Financial Agreement (BFA) in Australia, is a practical way to protect your assets and avoid costly disputes down the track. These legally binding agreements allow couples to decide in advance how property, debts and finances will be handled if the relationship ends.
To create one, both partners must agree on the terms, get independent legal advice and sign a written agreement that meets strict legal requirements under the Family Law Act 1975. While it might feel like an awkward topic, a prenup can give both parties peace of mind and clarity, so you can focus on building your future together.
Read on to learn the key steps to create a prenuptial agreement in Australia and why legal guidance is essential from the start.
Quick Overview: Steps to Create a Prenuptial Agreement in Australia
In Australia, a prenuptial agreement is known as a Binding Financial Agreement (BFA). To create one, follow these key steps:
- Discuss and agree on terms – Both parties should openly discuss how assets, debts and spousal maintenance will be handled if the relationship ends.
- Engage independent legal advisors – Each party must obtain independent legal advice from separate lawyers to ensure the agreement is fair and legally binding.
- Draft the agreement – A lawyer will prepare the BFA in writing, outlining how property, financial resources and liabilities will be divided.
- Review and sign – Both parties must carefully review the final agreement, then sign it with their respective legal representatives.
- Ensure compliance – The BFA must meet all legal requirements under the Family Law Act to be enforceable.
Getting legal advice at every stage is essential to protect your interests and ensure the agreement holds up in court if challenged.
What Is a Prenuptial Agreement or Binding Financial Agreement?
A Binding Financial Agreement (BFA) is a legal document that outlines how a couple’s finances will be handled if they separate. It can be made:
- Before marriage (prenuptial)
- During marriage (postnuptial)
- After separation or divorce
These agreements help couples avoid lengthy court battles and protect assets they bring into the relationship.
Common topics covered in a BFA include:
- Property and asset division
- Treatment of debts and liabilities
- Spousal maintenance arrangements
- Superannuation splitting
- Financial resources or inheritances
Who Should Consider a Binding Financial Agreement?
A prenuptial agreement may be suitable for couples who:
- Have significant assets before marriage
- Own a business or family trust
- Have children from a previous relationship
- Expect to receive a future inheritance
- Want clarity and control over financial arrangements
Even couples with modest assets may benefit from setting financial expectations early.
Legal Requirements for a Valid Binding Financial Agreement in Australia
To be legally binding and enforceable, a prenuptial agreement must meet strict requirements under the Family Law Act 1975:
- The agreement must be in writing.
- It must be signed by both parties.
- Each party must receive independent legal advice from a qualified family lawyer.
- A lawyer must provide a signed statement confirming they gave legal advice.
- The agreement must not be obtained through fraud, coercion or unfair pressure.
- The agreement must comply with public policy and not be significantly unfair.
Failure to meet any of these requirements can lead to the agreement being set aside by a court.
Step-by-Step Guide: How to Create a Prenuptial Agreement or Binding Financial Agreement
1. Start the Conversation Early
Raise the topic well before your wedding to avoid tension or pressure. Make it a mutual discussion about protecting both parties’ interests.
2. Disclose All Financial Information
Full and honest disclosure is crucial. Each party should disclose:
- Income
- Assets (e.g. property, vehicles, savings)
- Liabilities (e.g. debts, loans)
- Superannuation
- Investments or expected inheritances
3. Engage Independent Family Lawyers
Each partner must seek their own legal advice. Your lawyer will:
- Review your financial situation
- Draft or review the agreement
- Ensure the terms are fair and lawful
- Provide the required legal advice certificate
4. Negotiate and Finalise the Agreement
Your lawyers can help mediate any concerns or propose changes. Once all terms are agreed:
- The agreement is drafted and reviewed
- Both parties sign the document
- Each lawyer provides a certificate confirming legal advice was given
5. Keep the Agreement Safe and Up to Date
Store your BFA securely. If your financial situation or relationship changes significantly, you may need to update the agreement. This includes:
- Birth of children
- Major asset purchases
- Changes in income or employment
A BFA can be replaced by a new agreement if both parties agree and legal steps are followed.
Can a Court Set Aside a Binding Financial Agreement?
Yes, under certain circumstances, the Family Court can declare a BFA invalid. This may occur if:
- One party was pressured or coerced into signing.
- There was fraud or non-disclosure of financial information.
- The agreement is significantly unfair or unconscionable.
- The agreement does not meet legal requirements.
To reduce the risk of enforceability issues, it’s crucial to obtain experienced legal advice.
Benefits of Having a Binding Financial Agreement or Prenuptial Agreement
A prenuptial agreement can offer several practical and emotional benefits for couples entering marriage, including:
- Clarity and certainty: Know exactly how your assets will be treated.
- Protect family wealth: Ensure inheritance or business assets are safeguarded.
- Avoid future disputes: Prevent lengthy and expensive court proceedings.
- Promote open communication: Encourages transparency and mutual respect.
- Customised terms: Tailor the agreement to your specific needs and relationship.
Common Myths About Binding Financial Agreements
Binding financial agreements are often misunderstood, leading many couples to avoid them based on misconceptions rather than facts. In reality, this agreement can be a practical and respectful way to plan for the future. Let’s clear up some of the most common myths:
Myth 1: They’re only for the wealthy.
Fact: While high-net-worth individuals often use BFAs, you don’t need to be rich to benefit from one. Any couple, regardless of income, can gain peace of mind by clearly outlining how assets, debts and financial responsibilities will be handled during the relationship or in the event of separation.
Myth 2: They show a lack of trust.
Fact: A BFA isn’t about expecting the worst; it’s about being prepared. Discussing finances openly builds trust, shows mutual respect and ensures both partners are on the same page about their future, especially when it comes to money matters.
Myth 3: They’re unromantic.
Fact: While it might seem unromantic at first glance, having a thoughtful conversation about financial expectations can actually strengthen your relationship. It encourages honest dialogue and demonstrates that both partners are willing to make mature, informed decisions together.
FAQs – Creating a BFA in Australia
Can we use the same lawyer to save costs?
No. Each person must have their own independent lawyer for the agreement to be valid.
Can a prenup cover parenting arrangements?
No. BFAs cannot govern child custody or parenting matters; these are handled separately.
Do prenups need to be registered with the court?
No. Once properly signed and witnessed, they are enforceable under family law.
Can a prenup be changed after marriage?
Yes. You can create a new agreement or terminate the old one with mutual consent and legal advice.
Planning to Get Married? Let Johnsons Law Group Help You Protect Your Future
A BFA doesn’t mean you expect your marriage to fail. It means you value open communication and security. At Johnsons Law Group, we’ll help you draft a legally sound and fair agreement that protects both partners.
Call our experienced family lawyers on 02 9600 7277 or visit our Contact Us page to schedule a confidential consultation. Let’s help you prepare for your future with confidence and clarity.
