A prenuptial agreement—known in Australia as a Binding Financial Agreement (BFA)—is a legal contract made between two people, generally before they marry or enter a de facto relationship. This agreement sets out how assets, property, and financial responsibilities will be divided if the relationship breaks down or ends.
BFAs can be signed at other stages of a relationship, including when financial circumstances change.
What is a Prenuptial Agreement?
A prenuptial agreement is designed to provide clarity and certainty about financial matters at the conclusion of a relationship. It can cover:
- How property, savings, and investments will be divided
- What happens to business interests
- How debts and liabilities are managed
- Arrangements for spousal maintenance
- Financial protection for children of the relationship, or children of previous relationships
How Does a Prenuptial Agreement Work?
In New South Wales, prenuptial agreements are recognised under the Family Law Act 1975 (Cth). For a BFA to be legally binding, it must:
- Be in writing and signed by both parties
- Include full and frank disclosure of each person’s assets and debts
- Be entered into freely, without pressure or duress
- Be accompanied by independent legal advice for each party, with a certificate from each lawyer
If these requirements are not met, or if the agreement is unfair, a court may set it aside.
Steps to Create a Prenuptial Agreement
- Discuss Your Goals
Talk openly with your partner about your financial situation and what you both want to achieve. Do you have assets you want to protect, or mutual financial goals you want to reach? - Full Financial Disclosure
Both parties must provide complete details of their assets, debts, and income. This includes real estate, shares, investments, superannuation, businesses and income from all sources. - Seek Independent Legal Advice
Each person must have their own lawyer to explain the agreement and its effects. - Draft and Sign the Agreement
A lawyer will draft the agreement to ensure it meets legal requirements. Both parties then sign. - Review and Update as Needed
If your circumstances change (for example, if you have children or acquire new assets), review the agreement to keep it up to date.
Why Consider a Prenuptial Agreement?
Lots of factors may lead to a BFA being useful in a relationship. One person may already own real estate they have worked hard to buy on their own, or have children from previous relationships they want to protect. Other factors might include existing financial relationships with family members or business partners, or even anticipated inheritances.
A prenuptial agreement can:
- Protect personal or family wealth
- Safeguard business interests
- Clarify financial expectations
- Reduce the risk of disputes and lengthy court proceedings
- Provide peace of mind for both parties
A prenuptial agreement is a practical way to protect your financial future and set clear expectations before marriage or a de facto relationship. By following the correct legal steps and seeking professional advice, you can ensure your agreement is fair, valid, and enforceable.
For more information on Binding Financial Agreements or to discuss your options, contact our experienced family law team.
mail@redhale.com.au or call us on 02 9587 3866
This article was written by Philip Todorovski, Solicitor, Redmond Hale Simpson.