Certainty in Uncertain Times
Relationship breakdowns are stressful enough without having to argue about who gets the family home, who keeps the business, or who is responsible for debts. A Binding Financial Agreement (BFA) is a contract recognised under Australian family law that allows couples to agree in advance—before, during or after a relationship—how their property, liabilities and future financial support will be divided if they separate. Done properly, a BFA can keep you out of court, control legal costs, and protect assets you have worked hard to build.
Yet BFAs are frequently misunderstood. Are they the same as a “prenup”? What can they cover? Are they truly watertight? And, with major reforms to Australia’s property‑settlement rules coming into force from 10 June 2025, do BFAs still make sense? This article answers those questions and explains why a tailored BFA, drafted with the help of an experienced solicitor like Laurie Irvine, remains one of the most powerful planning tools available.
What Exactly Is a Binding Financial Agreement?
Under Part VIIIA (marriages) and Division 4 of Part VIIIAB (de facto relationships) of the Family Law Act 1975 (Cth), a BFA is a private contract that can:
- Exclude the Court’s jurisdiction over property and spousal‑maintenance disputes.
- Specify how assets, liabilities and superannuation will be divided.
- Address ongoing or future spousal maintenance obligations.
- Stand alone or sit alongside other documents such as Wills and testamentary trusts.
Because it “ousts” the Court’s usual powers, the Act imposes strict formality rules to ensure each party truly understands what they are giving up.
When Can You Enter into a BFA?
| Relationship stage | Relevant sections | Common name |
| Before marriage | s 90B | Prenuptial agreement |
| During marriage | s 90C | Post‑nuptial agreement |
| After divorce | s 90D | Financial agreement after divorce |
| Before de facto | s 90UB | Cohabitation agreement |
| During de facto | s 90UC | Relationship agreement |
| After separation | s 90UD | Separation agreement |
What Can a Binding Financial Agreement Cover? — Digging Deeper
Beyond the headline items, a well‑crafted BFA can also deal with “financial resources”—things that are not property in the strict legal sense but still carry economic value. Examples include unvested employee share schemes, long‑service leave entitlements, potential personal‑injury settlements and trust distributions where one party is effectively the controlling mind of the trust. By spelling out who is entitled to what, you reduce the risk of future arguments about whether something falls into the divisible asset pool.
Couples frequently overlook future inheritances. While you cannot “contract out” of a parent’s Will, you can agree that any inheritance one party eventually receives will remain their separate property, provided it is kept out of joint accounts. Likewise, where a family business or farming enterprise has been in one lineage for generations, a BFA can pre‑emptively protect that legacy.
Finally, BFAs can include lifestyle clauses—for instance, who keeps the family Labrador, or who retains membership to the golf club. While these may sound minor, they often hold strong emotional value and settling them now can avert heartache later.
If you’re considering a prenup, our deep‑dive on the vital role of prenuptial agreements in Melbourne explains how those agreements work before you say ‘I do’.
Why Consider a BFA? — Expanded Advantages
Certainty and Control
Many clients describe negotiations in the shadow of the Court as “handing the pen to a stranger”. A BFA lets you pick up that pen. Because you and your partner design the settlement, there’s no risk of a judge imposing a solution that neither of you wants.
Privacy Plus
Family Court files are generally open to journalists unless special orders are made. High‑profile individuals—from medical professionals to local business owners—often prefer a BFA precisely because it never appears on any public register.
Speed and Cost‑Saving
Litigation expenses can spiral quickly: expert valuations, subpoenas, interim hearings. By contrast, most BFAs are finalised in weeks rather than months. One 2024 study from the College of Law estimated the median cost of a negotiated BFA at $6,500 per party, compared with $25,000–$40,000 for a defended property application.
Asset‑Protection for Entrepreneurs
If you operate a start‑up or professional practice, uncertainty over equity can scare away investors and bank lenders. A BFA provides the predictable ownership structure financiers love, often resulting in better lending terms.
Peace of Mind for Blended Families
Blended families face complex competing interests between a current spouse and children from earlier relationships. Coupled with an updated Will, a BFA ensures both groups are provided for exactly as intended—minimising the prospect of bitter estate litigation down the track.
Legal Requirements — The Fine Print Explained
Independent Legal Advice
Under ss 90G(1)(b) & 90UJ(1)(b), each party must receive independent advice before signing. “Independent” means a separate law practice—husband and wife cannot share the same solicitor for this purpose. The lawyer must explain:
- The effect of the agreement (what rights are surrendered).
- The advantages and disadvantages, including likely outcomes under ordinary family‑law principles if no BFA were signed.
Failure to give genuine, tailored advice risks later challenge; template letters are not enough.
Certificates of Advice
These certificates are not mere formalities—they are the linchpin that proves each party entered the agreement with informed consent. Laurie Irvine’s firm keeps scanned copies on a secure cloud drive and original hard copies in fire‑rated storage—belt and braces.
Termination Agreements & Variations
If you ever need to scrap or amend the BFA, you can:
- Sign a Termination Agreement (also requiring independent advice), or
- Execute a new BFA that expressly revokes the earlier one.
Attempting informal side letters or “handshake” amendments puts the entire arrangement at risk.
Upcoming 2025 Property‑Settlement Reforms — Why They Matter
From 10 June 2025, the Family Law Amendment Act 2024 introduces a five‑step “fair‑outcome” test replacing the current four‑step approach. Key innovations include:
- Economic‑impact factors – Courts must weigh the financial aftermath of family violence, potentially increasing the leaving partner’s share.
- Greater scrutiny of superannuation – Judges can now split even small super interests where it promotes fairness.
- Companion‑animal provisions – “Best interests of the pet” considerations may dictate who gets the cavoodle.
Transitional litigation is forecast to surge as lawyers argue how the new test applies; early cases will set precedents but could take years to wend through the hierarchy of appeals. Signing a BFA today “locks in” your chosen rules and avoids becoming a test case.
For de facto couples, the reforms introduce a mandatory 12‑month limitation period for property claims (matching divorcees), adding another layer of complexity. A BFA sidesteps all limitation arguments because the Court’s jurisdiction is ousted altogether.
Risks and How a BFA Can Be Set Aside — In Context
Duress & Undue Influence
In Thorne v Kennedy (2017) HCA 49, the High Court set aside two BFAs where the fiancée was given an ultimatum—sign days before the wedding or the ceremony was off. The judges stressed unequal bargaining power, ticking clocks and poor translation support as red flags. Takeaway: begin discussions early and maintain transparent, respectful negotiations.
Non‑Disclosure
Omitting crypto holdings, share options or even H‑class company shares can invalidate the entire contract. Australian family‑law jurisprudence imposes a “cards face‑up on the table” obligation that BFAs do not override. Full disclosure today is the cheapest insurance policy you can buy.
Material Change in Circumstances
Suppose, after signing, the couple’s infant becomes severely disabled and ongoing care costs skyrocket. Section 90K(1)(d) allows a court to set aside a BFA if its enforcement would cause hardship to a child of the relationship. Periodic reviews—say, every three years or after major life events—reduce this risk.
Procedural Defects
Simple clerical errors (incorrect section numbers, missing witness signatures) have toppled otherwise solid agreements. Laurie Irvine’s practice uses a dual‑lawyer sign‑off checklist and Law Council‑compliant precedent templates to eliminate such pitfalls.
Take‑Home Message – The vast majority of successful attacks stem from poor drafting or corner‑cutting on advice. Partnering with an accredited family‑law specialist dramatically increases the staying power of your BFA.
BFA vs Consent Orders – Which Is Better?
| Feature | Binding Financial Agreement | Consent Orders |
| Court approval needed? | No – private contract | Yes – filed with FCFCOA |
| Flexibility | Very high | Must satisfy “just & equitable” test |
| Appeal/variation | Only via set‑aside grounds | Can be varied by later consent or appeal |
| Privacy | Completely confidential | Stored on Court file |
| Cost & speed | Generally faster once agreement reached | Slight delay for Court processing |
In practice many separating couples still choose Consent Orders because they invite less scrutiny later. However, for couples seeking maximum flexibility, confidentiality or who want to sign before marriage, a BFA is the only option.
Do You Need a Binding Financial Agreement? – Common Scenarios
- Second marriages/blended families – quarantine assets for children from a first relationship.
- Small‑business owners – protect trading entities or keep business valuations out of court.
- Unequal contributions – where one partner brings significantly more wealth or expects an inheritance.
- Stay‑at‑home parents – secure fair spousal‑maintenance terms in advance.
- Self‑managed super funds – clarify how SMSF assets will be split.
- International elements – couples with property overseas wanting Australian law to apply.
If any of these resonate, a BFA is worth serious consideration.
The Six Steps to a Strong, Enforceable BFA
- Initial strategy meeting with Laurie Irvine to scope goals and red‑flag issues.
- Full and frank financial disclosure by both parties.
- Negotiation & draft agreement – incorporating tax, super and estate‑planning input.
- Independent legal advice – each party retains their own lawyer (Irvine Lawyers can refer your partner if needed).
- Signing & certificate exchange – strict attention to formality.
- Safe storage & regular review – update if major life changes occur (new child, business sale, inheritance).
Why Link Your BFA to Your Will?
A BFA controls what happens on separation; a Will controls what happens on death. Aligning the two ensures there are no gaps or contradictions—for example, where your BFA leaves the family home to you on divorce but your outdated Will gifts it to your former spouse’s estate. Starting (or updating) your Will at the same time as your BFA is efficient and cost‑effective.
A Binding Financial Agreement is more than a “prenup.” It is a flexible, confidential and legally recognised way to protect wealth, minimise conflict and give both partners certainty—no matter what changes family law reform may bring.
Ready to secure your financial future and streamline your estate planning?
Book an obligation‑free appointment with Laurie Irvine today. He will guide you through drafting a robust BFA and get you started on a comprehensive Will so your interests are protected in every scenario.
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