Binding Financial Agreements in Australia: A Guide
What are Binding Financial Agreements and Do You Need One in 2025?
Binding financial agreements are legally enforceable documents that outline how assets, property, and financial resources will be divided if a relationship breaks down. In Australia, they apply to both married and de facto couples. These agreements can help prevent costly legal disputes and offer peace of mind, especially for people with significant assets, businesses, or children from previous relationships.
Understanding Binding Financial Agreements in Australia
A binding financial agreement (BFA) is a private legal contract between two people that sets out how financial matters will be handled during or after a relationship. Under the Family Law Act 1975, these agreements can be made:
- Before a relationship or marriage (commonly known as a prenup)
- During a relationship
- After separation or divorce
The main goal of a BFA is to avoid uncertainty or conflict if a relationship ends. While it may not be the most romantic topic, it’s a smart legal move especially in 2025, when financial independence and asset protection are more important than ever.
Why Do People Enter Into Binding Financial Agreements?
There are several reasons why individuals and couples choose to create binding financial agreements:
- To protect assets acquired before the relationship
- To safeguard businesses, property, or inheritances
- To clearly define financial responsibilities
- To prevent future legal disputes or court proceedings
- To manage expectations for children from previous relationships
For example, if one partner owns a business, a BFA can ensure it remains protected in the event of separation. This can be crucial for business continuity, especially in cases where other family members are involved in the enterprise.
- For more insight into how divorce or separation can affect your business, this guide from Westpac offers helpful financial considerations.
Are Binding Financial Agreements Legally Enforceable?
Yes, but only if they meet specific legal requirements. To be legally binding under Australian law, the agreement must:
- Be in writing and signed by both parties
- Clearly outline how assets and liabilities are to be divided
- Include confirmation that both parties received independent legal advice
- Be compliant with the relevant provisions of the Family Law Act 1975
It’s not enough to draft an agreement yourselves, you must seek advice from a lawyer, which ensures that your interests are protected and that the agreement is enforceable in court if challenged.
Binding Financial Agreements and De Facto Relationships
BFAs are not just for married couples. In Australia, de facto couples are treated similarly to married couples under the law. If you’re living together and sharing finances, a binding financial agreement can offer clarity and protection should the relationship end.
This is especially relevant for people entering a second relationship or bringing significant personal or business assets into a new partnership.
Do You Really Need a Binding Financial Agreement?
This is one of the most commonly asked questions, and the answer depends on your personal circumstances. Here are some signs that a BFA might be a smart decision:
- You or your partner own a home, business, or other high-value assets
- One person earns significantly more than the other
- You have children from a previous relationship
- You’re entering into a second marriage or partnership
- You want to avoid the emotional and financial cost of court disputes
Even if you never need to rely on the agreement, having one in place offers security and peace of mind, much like insurance.
Common Misunderstandings About BFAs
“It’s just for wealthy people.”
BFAs are valuable for anyone with assets to protect, not just the ultra-wealthy.
“It’s unromantic or pessimistic.”
Planning for the future is a responsible act. Just as you take out insurance, a BFA is about preparation, not prediction.
“We’re already living together, it’s too late.”
You can create a BFA at any stage of a relationship, even after you’ve separated.
How a Lawyer Can Help With Binding Financial Agreements
Because of the strict legal requirements involved, you should never attempt to draft or finalise a binding financial agreement without legal assistance.
At Janson Lawyers , our experienced family law team can help by:
- Drafting or reviewing a binding financial agreement tailored to your needs
- Ensuring the agreement meets legal standards and is enforceable
- Offering independent legal advice, as required by law
- Helping you understand your rights and obligations
We aim to make the process clear, supportive, and as straightforward as possible because protecting your financial future shouldn't be complicated.
Final Thoughts: Peace of Mind Starts With the Right Advice
If you’re in a relationship and want to protect your assets, plan for the future, or avoid legal battles down the road, a binding financial agreement could be the right solution for you.
We understand that every relationship is different, and so are your legal needs. That’s why Janson Lawyers takes the time to provide personalised advice based on your circumstances, no jargon, no stress.
Ready to Secure Your Future?
Whether you’re starting a relationship, planning a wedding, or already living with your partner, it’s never too early, or too late to take control of your financial future.
Get in touch with Janson Lawyers today to find out how a binding financial agreement could protect what matters most to you.
