Prenup in NSW | Binding FinancialAgreements

I’m in a new relationship – Do I need a prenup?

Asset Protection

Binding Financial Agreements (BFAs) or Prenups

Protecting your assets, your family and your future

What is a Binding Financial Agreement?

When people hear the term prenups, or Binding Financial Agreement (BFA) as they are formally called, they often think of wealthy celebrities or couples about to get married. In reality, BFAs are available to many Australians at different stages of a relationship and can provide certainty, flexibility and peace of mind as to the division of a couple’s assets.

A BFA is a private agreement made under the Family Law Act 1975 (Cth) that allows couples to decide how their property, financial resources and, in some cases, spousal maintenance will be dealt with if their relationship ends.

Rather than leaving these decisions to the Family Court, a BFA allows you and your partner to make your own arrangements, tailored to your circumstances and often in advance, which avoids stress and conflict.

Who can enter into a Binding Financial Agreement?

A BFA is not limited to couples getting married.

You may enter into a BFA:

before marriage;
during a marriage;
after separation or divorce;
before entering into a de facto relationship;
during a de facto relationship; or
after a de facto relationship has ended.

Whether you are protecting assets you’ve worked hard to build or simply want certainty about the future, a BFA is definitely worth considering.

Is a BFA right for you?

A BFA may be particularly beneficial if one of the following applies to you before entering a new relationship:

you own a home or other significant assets;
you own a business or farm, or are a beneficiary of a family trust;
you expect to receive an inheritance;
one party has significantly greater assets than the other;
you have children from a previous relationship; and/ or
you simply want certainty about what would happen if the relationship ended.

Every relationship is different, which is why every BFA should be tailored to the parties
involved.

What can a BFA cover?

A Binding Financial Agreement can deal with matters including:

division of property;
responsibility for debts;
ownership of businesses;
superannuation interests;
future inheritances (to a limited extent); and
spousal maintenance.

For example, a BFA may provide that:

each party retains the assets they brought into the relationship;
inheritances remain the property of the party who inherits them;
a business stays with its original owner; or
property is divided differently depending on how long the relationship lasts.

One of the greatest advantages of a BFA is its flexibility.

The advantages of a Binding Financial Agreement

Greater certainty
Instead of relying on the Family Court to determine what is “just and equitable”, you and your partner decide how your financial affairs will be dealt with. It is also important to remember that by the time a relationship needs the intervention of the Family Court, interactions between you and your partner will be strained, possibly volatile or heated, and incredibly stressful. By taking the time earlier in a relationship, when all parties are interacting calmly and rationally, to discuss how assets might be divided can avoid so much stress, and expense, if left until the relationship has fallen apart.

Protection of assets
A BFA can help protect:

property owned before the relationship;
businesses and family trust interests;
farming enterprises;
investments; and
inheritances.

Protecting children from previous relationships
BFAs are often used in blended families to help preserve assets intended for children from an earlier relationship. We encourage our clients to consider a BFA early in a blended relationship to provide certainty for all parties and their families.

Potentially saving significant legal costs
Family law litigation can be expensive and emotionally draining.

While a BFA involves an upfront legal cost, it may save considerable legal fees if the relationship later breaks down.

Privacy
Unlike court proceedings, BFAs allow couples to keep their financial arrangements private without the need for court hearings.

Are there any disadvantages?

Yes.
A BFA is an important legal document and should never be entered into lightly.

A BFA can be challenged
A common misconception is that BFAs are impossible to overturn.

Whilst they offer strong protection if drafted properly, the Family Court may set aside a BFA in certain circumstances, including:

fraud or failure to disclose assets;
duress or undue influence – you can’t provide one to your soon-to-be spouse before walking down the aisle!
unconscionable conduct;
significant changes involving children that would cause hardship; or
failure to comply with the legal requirements.

Independent legal advice is compulsory
Each party must receive independent legal advice before signing.

Without proper legal advice, the agreement is unlikely to be binding.

Many Binding Financial Agreements are successfully challenged because they were not properly prepared by a solicitor.
Common mistakes include:

inadequate drafting;
failing to fully disclose financial circumstances;
rushing the signing process;
pressuring one party into signing; and
failing to review the agreement after major life events.

Proper legal advice at the outset can significantly reduce these risks.

Circumstances change
Relationships evolve.

Children are born.

Businesses grow.

People receive inheritances.

A BFA should be reviewed from time to time to ensure it still reflects the parties’ intentions and circumstances.

Frequently Asked Questions

Can a Binding Financial Agreement be challenged in court?

Yes. While a properly prepared Binding Financial Agreement is intended to be legally binding, the Family Court can set it aside in limited circumstances. These include fraud, failure to disclose assets, duress, unconscionable conduct, or where the legal requirements of the Family Law Act have not been met. Obtaining independent legal advice and ensuring the agreement is carefully drafted significantly reduces these risks.
How much does a Binding Financial Agreement cost in Australia?

The cost of a Binding Financial Agreement depends on the complexity of your financial affairs, whether businesses, trusts or inheritances are involved, and whether the parties are able to reach agreement without extensive negotiation. While some straightforward matters may be completed for a fixed fee, more complex agreements require additional work. We provide a clear estimate of costs at the outset so you know what to expect before any work begins.
Is a Binding Financial Agreement the same as a prenup?

Essentially, yes. A “prenup” is the common term used for a Binding Financial Agreement entered into before marriage. However, Binding Financial Agreements can also be entered
into during a marriage, after separation, before or during a de facto relationship, or after a de facto relationship ends.
Can de facto couples have a Binding Financial Agreement?

Yes. Australian family law allows de facto couples to enter into Binding Financial Agreements before, during or after their relationship. They offer the same ability to determine how assets, liabilities and financial resources will be divided if the relationship ends.
Do both parties need their own solicitor?

Yes. Independent legal advice is a legal requirement. Each party must receive advice from their own solicitor about the effect of the agreement and the advantages and disadvantages of entering into it. Without this, the agreement is unlikely to be enforceable. One party’s solicitor will draft the BFA and the other party’s solicitor will review and request amendments. Once negotiations are settled, the agreement can be signed.
Can a Binding Financial Agreement protect an inheritance?
Can a Binding Financial Agreement protect a family business?

Yes. One of the most common reasons people enter into a Binding Financial Agreement is to protect a business, farming enterprise or interest in a family trust. The agreement can specify that those assets remain with their original owner if the relationship breaks down.
When should a Binding Financial Agreement be reviewed?

A Binding Financial Agreement should be reviewed whenever there is a significant change in circumstances, such as marriage, the birth of children, the purchase or sale of major assets, receiving an inheritance, or starting or selling a business. Regular reviews help ensure the agreement continues to reflect the parties’ intentions.
What happens if you separate without a Binding Financial Agreement?

If there is no Binding Financial Agreement, property settlement will generally be determined under the Family Law Act. If the parties cannot reach agreement, the Family Court may decide how assets, liabilities and financial resources should be divided based on what is just and equitable.
Is a Binding Financial Agreement worth it?

For many couples, yes. A Binding Financial Agreement can provide certainty, protect assets, minimise disputes and preserve family wealth. Whether it is appropriate depends on your personal circumstances, financial position and future plans, which is why tailored legal advice is essential.

Final thoughts

A Binding Financial Agreement is much more than a “prenup”.

It is a practical legal tool that allows couples to make informed decisions about their financial future before, during or after a relationship.

Whether you are seeking to protect existing assets, provide certainty for your family, or simply avoid unnecessary costly disputes in the future, a carefully prepared BFA may provide valuable peace of mind.

Because every person’s circumstances are different, it is important to obtain independent legal advice before entering into a Binding Financial Agreement.

Need advice about a Binding Financial Agreement?

If you are considering entering into a Binding Financial Agreement, or you have been asked to sign one, Fioro Legal’s experienced solicitors can provide tailored legal advice to help you understand your rights, obligations and options before you commit to this important legal document.

This article is general in nature and does not constitute legal advice. Every situation should be considered on its own facts.

If you would like a BFA prepared or review, please get in contact Fioro Legal on 0481 848 450 or get in touch at
info@fiorolegal.com.au.

Mobile: 0481 848 450

Email: info@fiorolegal.com.au

Web: www.fiorolegal.com.au