What is a Binding Financial Agreement?

When relationships break down, financial uncertainty often follows. Many people worry about protecting their assets, securing future stability, and avoiding costly disputes in court. A Binding Financial Agreement (BFA) offers one solution.

In Australia, BFAs are private agreements recognised under the Family Law Act 1975 (Cth). They allow couples to decide how assets, liabilities, and spousal maintenance will be divided, either:

• before marriage or a de facto relationship (similar to a “prenup”),

• during the relationship, or

• after separation or divorce.

  
  

How Does a Binding Financial Agreement Work?

A BFA is a legally binding contract between two parties that sets out how property and finances will be dealt with if the relationship ends.

Key features include:

• Both parties must obtain independent legal advice before signing.

• The agreement must be in writing and signed by both parties.

• It can cover property division, financial resources, and spousal maintenance.

Without a BFA, property settlements are usually determined by negotiation, mediation, or as a last resort, court orders.

Benefits of a Binding Financial Agreement

1. Clarity and Certainty

   You and your partner know in advance how assets will be divided.

   
   

2. Asset Protection

   Particularly valuable for second marriages, blended families, or protecting inheritances and business interests.

   
   

3. Privacy

   Unlike court proceedings, a BFA is private.

   
   

4. Avoiding Court

   Saves time, money, and emotional strain compared to litigation.

   
   

Risks and Limitations

While BFAs can be powerful, they are not bulletproof. Common risks include:

• Invalidation: If the strict requirements of the Family Law Act are not met.

• Undue Pressure: Agreements signed under duress or without full disclosure may be set aside.

• Changed Circumstances: Serious changes, such as illness or hardship, can impact enforceability.

  
  

Binding Financial Agreement vs Consent Orders

Aspect	Binding Financial Agreement	Consent Orders
Process	Private agreement	Approved by the Family Court
Oversight	No Court involvement	Court ensures fairness
Flexibility	More private and tailored	Must satisfy court’s “just and equitable” test
Risk	Can be overturned if requirements unmet	More certainty, but less flexible

Both options have their place. A family lawyer can advise which suits your circumstances.

When Should You Consider a BFA?

• Before marriage or moving in together: To protect existing assets.

• During the relationship: To safeguard inheritances or business interests.

• After separation: To finalise financial matters without going to court.

  
  

FAQs About Binding Financial Agreements

Is a Binding Financial Agreement the same as a prenup?

Yes. In Australia, the term “prenup” is commonly used, but legally it is called a Binding Financial Agreement.

Do both partners need separate lawyers?

Yes. Each party must receive independent legal advice for the agreement to be binding.

Can a BFA be overturned?

Yes, in cases of fraud, duress, unconscionable conduct, or significant non-disclosure.

How much does a BFA cost?

Costs vary depending on complexity. A simple agreement may cost a few thousand dollars, while more complex arrangements can be higher.

Which is better – a BFA or Consent Orders?

It depends. BFAs are more private, but Consent Orders provide greater certainty through court approval.

Next Steps: Speak to a Family Lawyer in Adelaide

If you’re considering how best to protect your assets or finalise a separation, it’s important to get tailored legal advice. At Craig McKay Legal, we guide families and individuals across Adelaide through Binding Financial Agreements, ensuring compliance with the law and protecting your interests.

Take advantage of our complimentary no-obligation telephone consult on any new matter.

This article is for general information only and is not a substitute for legal advice. For advice specific to your situation, please contact our office.