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Prenups and Binding Financial Agreements

Prenups and Binding Financial Agreements in Australia: Your Complete Guide

Prenups and Binding Financial Agreements

If you are thinking about protecting your assets, income, and future financial security, you have probably come across the terms prenup and Binding Financial Agreement. In Australia, these agreements give you the ability to decide how your property and finances will be divided if your relationship ends. For many couples, it is a practical and respectful way to avoid conflict, protect existing assets, and create clarity about what happens in the future.

This guide explains everything you need to know, with references to real case law, examples, and scenarios that help you understand how these agreements work and how they apply to your situation. The information is relevant across Australia and aligns with Queensland and Brisbane practice, where interpretation varies between states.

What Is a Prenup in Australia?

A prenup in Australia is more commonly known as a Binding Financial Agreement (BFA). It is a legally recognised contract that you and your partner can enter before marriage or before starting a de facto relationship. It sets out how your property, assets, liabilities, and financial resources will be divided if you separate later.

Unlike the United States, prenups in Australia are regulated by the Family Law Act 1975. This means they must meet strict legal requirements, or else they may be declared invalid.

Why You Might Consider a Prenup

You may want a prenup if:
You own significant assets before entering a relationship
You are expecting an inheritance
You run a business
You have children from a previous relationship
You want clarity and financial certainty
You want to avoid future disputes and court action

A prenup can give you peace of mind and protect the things you have worked hard to build.

What Is a Binding Financial Agreement?

This makes BFAs a flexible tool. You might create one at the start of your relationship, or later on, once you have accumulated joint assets. There is no requirement that you must be planning a wedding or living together for any set period before making a BFA.

How a BFA Works

A BFA outlines:
How property and assets will be divided
Who keeps the home
What happens to bank accounts, shares, and investments
How debts will be handled
Whether spousal maintenance will be paid
What happens to future assets or inheritance

In Brisbane and Queensland, BFAs are commonly used by professionals, business owners, and couples who want to minimise financial risk.

Are Prenups and BFAs Legally Binding?

Yes, but they must meet strict rules to be enforceable. The Family Court and Federal Circuit and Family Court of Australia will examine these agreements very closely.

For your agreement to be binding:

It must be signed by both parties
Both parties must receive independent legal advice
Your lawyers must sign a certificate confirming advice was given
The agreement must comply with all sections of the Family Law Act
The agreement must not be obtained through fraud, pressure, or unfair conduct

Courts in Brisbane see many BFAs challenged each year. The most common reason for failure is inadequate legal advice or one party feeling pressured to sign.

Case Law Example: Thorne v Kennedy

The High Court’s decision in Thorne v Kennedy (2017) is the most important case on prenups in Australia. It involved:

A wealthy Australian man
A woman with very few assets
A prenup signed shortly before the wedding

The court set aside the prenup on the basis of:

Undue influence
Unconscionable conduct
Power imbalance
Lack of real choice

This case shaped how Brisbane and Australian family lawyers draft BFAs today. You must have genuine bargaining power, adequate time to consider the agreement, and proper legal advice.

What You Can Learn from This Case

If you are preparing a prenup:

Do not leave it until the last minute
Make sure you understand everything you are signing
Ask questions and clarify anything that worries you
Choose your own independent lawyer
Do not sign under pressure

These steps protect you from the agreement being overturned later.

Other Examples of BFAs Being Set Aside

Courts may set aside BFAs in situations such as:

One party failing to disclose assets
A partner giving misleading information
The agreement being extremely one-sided
Significant changes in circumstances, such as a child developing a disability
Family violence affects a party’s ability to negotiate freely

For example, in a Queensland case involving a long-term de facto couple, the court set aside the BFA because one partner failed to disclose overseas investments. The judge ruled that the lack of honesty undermined the validity of the agreement.

What Can You Include in a Prenup or BFA?

You can tailor the agreement to your situation. Typical inclusions are:

1. Property Division

This covers:

Real estate
Cars and vehicles
Superannuation
Cash savings
Shares and cryptocurrency
Investments
Personal valuables

You can specify how these assets will be divided if you separate.

2. Debts and Liabilities

Your agreement can set out:

Who pays the mortgage
How you split credit card debt
Responsibility for ATO debts
Personal loans or business debts

This avoids fights in the future about who is responsible.

3. Spousal Maintenance

You can agree whether one party will receive financial support if separation occurs.

4. Businesses and Companies

If you own a business in Brisbane or elsewhere, a BFA can protect:

Your ownership shares
Future growth
Intellectual property
Family trusts
Cash flow distribution

Business owners often use BFAs as part of their asset protection strategy.

5. Inheritances

You can protect expected gifts or inheritances from your family.

6. Future Assets

You are allowed to include assets you may acquire later.

Why BFAs Are Popular in Brisbane and Across Australia

Prenups and BFAs have become increasingly common among:

Professionals
Business owners
FIFO workers
Couples entering relationships later in life
People with blended families
People who have gone through divorce previously

In Brisbane, many couples use BFAs to protect their home, family trusts, and investment portfolios.

Case Study Example: Protecting a Brisbane Home

Imagine you own a home in Brisbane’s northside valued at $750,000. You enter a new relationship, and you are concerned about protecting the house if things go wrong.

A BFA can state that:

The Brisbane property remains yours
The mortgage remains your responsibility
Any increases in the home value stay with you
Your partner has no claim to it if you separate

This allows you to share your life while still protecting the assets you built before the relationship.

How Prenups Work for De Facto Relationships

You can enter a BFA:

Before becoming de facto
During your de facto relationship
After your separation

Many Australians mistakenly believe prenups only apply to married couples. In reality, they apply to any couple living together on a genuine domestic basis. In Brisbane, this often includes blended families or couples who move in together quickly due to renting costs.

What a BFA Cannot Cover

There are limits to what you can include. For example, a BFA cannot:

Decide future parenting arrangements
Set child support for future children
Force behaviour within the relationship
Override decisions about child welfare

Parenting and children’s issues must be handled separately through parenting plans or court orders.

Steps to Create a Prenup or BFA

1. Initial Discussion With Your Partner

Talk openly about your financial goals, concerns, and expectations. This helps prevent misunderstandings later.

2. Prepare a Draft Agreement

Your lawyer prepares a draft that includes:

All assets and liabilities
Superannuation
Businesses and trusts
Future financial considerations

3. Full and Honest Disclosure

You must list everything you own and owe. If you hide something, the agreement can be overturned.

4. Independent Legal Advice

Each person must see their own lawyer. This ensures fairness.

5. Signing the Agreement

Both parties sign after receiving legal advice and having enough time to think it through.

6. Store the Agreement Safely

You do not file BFAs in court, but keep them with your lawyer and in secure records.

QUESTIONS?

Frequently Asked Questions

Do BFAs actually work?

Yes, when drafted properly. High-quality BFAs that meet all requirements have a strong chance of being upheld.

Can you update a BFA?

Yes. You can create a new agreement that replaces the old one.

Do you need to file it with a court?

No. You simply store it securely.

Do both partners need a lawyer?

Yes. You cannot share the same lawyer.

Can you do a prenup after marriage?

Yes. These are called postnuptial BFAs.

Is a Prenup or BFA Right for You?

Financial Agreement can be a smart decision. You deserve a relationship built on transparency and mutual respect. A well-drafted BFA helps you avoid conflict and gives you peace of mind knowing your assets and responsibilities are clearly defined.

Whether you are entering a new relationship, planning a wedding, or protecting a business or inheritance, understanding your rights puts you in control of your future.

We're here for you.

JMR Lawyers is based in Springwood and supports individuals and families from Brisbane’s southern suburbs, through Logan, and down to the Gold Coast.

Prenups and Binding Financial Agreements