Pre-Nups & Binding Financial Agreements
Pre-Nups & Binding Financial Agreements
Plan with clarity
A Binding Financial Agreement can help a couple decide how financial matters will be dealt with if their relationship ends. Done well, it is not about expecting a relationship to fail. It is about discussing expectations clearly, making informed choices and reducing future uncertainty.
These agreements are sometimes called pre-nups, but they are not limited to engaged couples. Married and de facto couples may enter a financial agreement before, during or after a relationship, subject to the requirements of the Family Law Act.
Because the law is complex and strict formal requirements apply, the agreement should be tailored to your circumstances and prepared with enough time for careful disclosure, advice and consideration.
On this page
Decide how financial matters should be handled
A Binding Financial Agreement is a private legal agreement made under the Family Law Act. Depending on when it is made and how it is drafted, it can deal with property, financial resources, liabilities, superannuation interests and spousal or de facto partner maintenance if a relationship ends.
Unlike consent orders, a financial agreement is not approved by the Court when it is made. Its effectiveness depends on compliance with the legislation, the circumstances in which it was negotiated and signed, and the quality and clarity of the document.
The Court can set aside a financial agreement in certain circumstances. No responsible adviser should describe an agreement as unchallengeable or guaranteed.
When an agreement may be useful
Property brought into a relationship
Clarify how a home, investments, savings or other assets owned before the relationship should be treated.
A business, company or trust
Consider how ownership, control, value and future growth should be handled without disrupting the wider business structure.
A second relationship or blended family
Balance the interests of a new partner, children from an earlier relationship and existing estate planning arrangements.
Unequal financial positions
Record agreed treatment of different starting assets, income, debts, gifts, inheritances or contributions.
Family wealth or expected gifts
Provide a framework for property received from parents or other family members, where appropriate.
Greater financial certainty
Create a clear framework that may reduce uncertainty, conflict and cost if the relationship ends.
Built around your actual circumstances
The scope of a financial agreement depends on the couple, the structures involved and when the agreement is made. It may address:
- Real estate and mortgages.
- Cash, investments and personal property.
- Businesses, companies, partnerships and trusts.
- Existing and future debts.
- Superannuation interests, where properly dealt with.
- Gifts and inheritances.
- Income and future asset growth.
- Spousal or de facto partner maintenance.
- The treatment of jointly acquired property.
- How particular expenses or liabilities will be handled.
- What happens if the relationship ends.
Each person needs their own lawyer
For an agreement to be binding, each person must receive independent legal advice from an Australian legal practitioner about the effect of the agreement on their rights and the advantages and disadvantages of entering it. Each lawyer must provide the required signed statement, and the agreement must satisfy the other technical requirements of the Family Law Act.
Good process also matters. The parties should allow enough time, exchange meaningful financial information and make decisions free from pressure, duress, undue influence or unconscionable conduct.
If another firm has drafted the agreement for your partner, we can advise you independently. If we prepare the agreement for you, your partner will need a separate lawyer.
A careful process produces a stronger agreement
Initial advice
Information and disclosure
Tailored drafting
Separate advice and negotiation
Finalise and sign correctly
Keep the agreement aligned with your life
A financial agreement should be reviewed when circumstances change significantly. Relevant changes may include marriage, children, a major inheritance, the purchase or sale of a business, a substantial change in wealth, relocation or a new estate plan.
An old agreement should not be informally edited. Depending on the circumstances, the parties may need a formal termination agreement, a replacement agreement or another legal document.
Frequently Asked Questions
Is a pre-nup only for wealthy people?
No. An agreement may be useful whenever a couple wants clarity about property, debts, family wealth, a business, a second relationship or different financial starting points. Whether it is proportionate depends on the circumstances and the value of the issues involved.
Can we use the same lawyer?
No. Each person must receive independent legal advice. One firm may draft the agreement for one party, but the other party needs a separate Australian lawyer.
Can we sign shortly before the wedding?
Leaving an agreement until the last minute can create practical and legal risk. Start early enough for disclosure, drafting, negotiation and independent advice without pressure.
Can an agreement cover children?
A Binding Financial Agreement does not decide parenting arrangements. Child support is governed separately and may be addressed through a different type of agreement where appropriate.
Can a financial agreement be set aside?
Yes, in certain circumstances. The Family Law Act gives the Court power to set aside financial agreements on specified grounds. Careful advice, disclosure, drafting and process can help manage risk but cannot eliminate it.
Can we enter an agreement after marriage or after separation?
Potentially, yes. Financial agreements can be made at different stages of a marriage or de facto relationship, including after separation. The correct form and whether an agreement is the best option depend on your circumstances.
Do financial agreements deal with superannuation?
They may deal with superannuation where the relevant legal requirements are met. The drafting needs to account for the fund, the proposed treatment and any additional procedural requirements.
Will the agreement replace my Will?
No. A financial agreement and an estate plan serve different purposes but can affect one another. They should be reviewed together, particularly for blended families, businesses, trusts and superannuation.