Binding Financial Agreements (BFAs) in Australia: What You Need to Know

A binding financial agreement, or BFA, is the family law version of a private contract about property. It is an agreement made before, during or after a marriage or de facto relationship that sets out how assets and liabilities will be divided if the relationship ends. People often call the pre-relationship version a "prenup."

Done properly, a BFA can remove the court's power to make property orders under the Family Law Act. Done poorly, it becomes an expensive document that fails at the very moment it was supposed to protect you.

What Makes a BFA Binding?

The requirements under the Family Law Act are strict. Most failed agreements fail here:

• Independent legal advice for both parties. Each party must receive advice from their own lawyer (before signing) about the effect of the agreement on their rights and the advantages and disadvantages of entering it. The advice must be meaningful: courts expect it to address your likely entitlements if there were no agreement. Each lawyer must provide a signed statement confirming the advice was given.
• Proper formalities. The agreement must be in writing and signed by all parties. Each party must receive a copy of the signed agreement and the other party's lawyer's advice certificate.
• Full and frank disclosure. An agreement built on hidden assets, undervalued property, or misleading information is vulnerable to being set aside.

When BFAs Usually Hold Up

Courts tend to uphold BFAs that were prepared carefully: with proper disclosure, no undue pressure, and terms that were reasonable at the time of signing. Strong candidates include:

• Second (or subsequent) relationships where each person brings in established assets
• Protection of a family business or expected inheritance
• Couples who want certainty and privacy rather than leaving outcomes to the court

When BFAs Fail

Courts can set aside BFAs on specific grounds (s 90K for married couples and s 90UM for de facto relationships). Common reasons include:

• Inadequate or "rubber stamp" legal advice
• Incomplete disclosure or fraud (including non-disclosure of material matters)
• Duress or undue pressure (the classic example is an agreement presented days before the wedding)
• Unconscionable conduct
• Material changes in circumstances, particularly involving the care, welfare and development of children, that would cause hardship if the agreement were enforced

BFA or Consent Orders?

If you have already separated and reached agreement, consent orders are usually the stronger option. The court reviews and approves the deal as just and equitable, making the outcome very difficult to challenge later.

BFAs have their place mainly before or during a relationship (where consent orders are not available) or where parties want specific terms a court might not approve. The right choice depends on your circumstances, timing, and goals. It is not simply a matter of preference.

The Honest Summary

A BFA is not a downloadable form or a "set and forget" document. If it is ever tested, it will be scrutinised at the worst possible time: during the breakdown of your relationship.

If it is worth doing, it is worth doing properly: full disclosure, high-quality independent legal advice from experienced lawyers, no deadline pressure, and terms you would be prepared to defend years later.

Aegis Law Group does not prepare binding financial agreements. Our focus is on property settlements and consent orders: the court-approved route that provides genuine finality and is significantly harder to disturb.

If you have separated and want your agreement formalised properly, call us on (07) 3709 7610 to book a first conference. We provide a fixed-fee quote when you book.

This article is general information only and is not legal advice. If you are considering or have been asked to sign a financial agreement, get advice on your specific situation.