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While introducing the idea of a binding financial agreement (BFA) may feel uncomfortable at first, these agreements offer practical clarity that protect couples, and family wealth, when circumstances change. In a recent column for The Sydney Morning Herald, BN Family Law Principal Will Stidston explains how a well‑structured BFA can set expectations early, reduce the risk of disputes, and safeguard contributions from parents or other relatives. He highlights why independent legal advice, careful drafting and regular reviews are essential to ensure agreements remain fair, enforceable and fit for modern relationships.
For anyone planning a major, exciting life milestone this year – like moving in with a partner, getting married or starting a family – thinking about a BFA is probably not high on the list of things to do.
Yet, it very much should be.
Having something concrete and legally binding in place can protect everyone involved from a potentially devastating family law dispute down the track.
And while no one starting a new relationship really wants to think about how things might end, having a conversation about financial matters and the ownership of assets at the beginning could prove invaluable.
What are binding financial agreements?
Binding financial agreements (colloquially known as 'prenups') have been part of the legal landscape in Australian for 25 years and are designed to provide certainty and control over financial matters.
In most instances, a BFA is typically created to protect people who have acquired a certain amount of wealth or assets before the start of a relationship. However, they are open to anyone who wishes to agree, ahead of time, how wealth accumulated during a relationship is to be divided to avoid the uncertainty and angst after a separation. At that point, there is enough to worry about.
To ensure a BFA is binding, under Australian law, it is mandatory for each partner in the relationship to obtain independent legal advice, with statements of advice from each legal representative inserted into the agreement.
Who uses BFAs?
Far from being a tool for the ultra rich, these legal contracts are becoming more commonplace, as a device to help avoid ugly court confrontations should things turn sour.
Childless couples who plan to marry or enter into a de facto relationship may want to set boundaries around how their assets, debts and earnings will be divided should things end in separation or divorce.
During a marriage, one partner may receive a significant windfall or inheritance, which they could want to protect through a BFA. Couples with children from previous relationships and in a new romantic partnership might decide a BFA is the best option for creating certainty around children's inheritances.
Increasingly, younger people who have experienced acrimonious family matters are seeking out BFAs to future-proof their finances.
Are BFAs watertight?
It is crucial to understand that while these agreements can be drafted with the utmost precision, it is still possible for BFAs to be challenged in court.
Like any other type of contract, a BFA can be set aside if certain criteria are met, and is subject to interpretations of law, and changes to laws because of societal expectations and pressures.
Under the Family Law Act (1975) a BFA can be set aside if, for example:
- It was fraudulently obtained, including with non-disclosure
- It is voidable or unenforceable
- It is impractical for all or part of the BFA to be carried out
- There has been a significant change in the care of a child, leading to hardship if the agreement remains in place, or
- One party (especially those in the superior financial position) engaged in unconscionable conduct.
A BFA must also be made in compliance with the law governing contracts generally.
Major life changes, such as the birth of a child, or financial windfalls are often the drivers behind updates to a person's will and BFAs should be no different. Events including a child's arrival should mean certain provisions are assessed and tweaked, as necessary.
Rather than a draconian and discriminatory legal instrument, these agreements are intended to evolve as a relationship endures, providing transparency and certainty. People should, and do, consider updating them like they do their wills and other important documents.
So, if 2026 is shaping up as a landmark year for you, be sure to seek advice on whether a BFA could be a good fit. Your future self might thank you.
View Will's original article on The Sydney Morning Herald website here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
