When you’re in love or building a life with someone, the last thing you want to think about is a breakup. But just like insurance, estate planning, or a will, a Binding Financial Agreement (BFA) is about preparing for the unexpected.
In Australia, BFAs are a legally binding way to define how your property, finances, and debts will be divided if your relationship ends. And while they’re often associated with wealth or celebrity divorces, they’re becoming increasingly common—and useful—for everyday couples.
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What Is a Binding Financial Agreement?
A Binding Financial Agreement is a legal contract made under the Family Law Act 1975 that allows couples to formalise how their financial matters will be handled if they separate. Unlike court orders, BFAs can be arranged before, during, or after a relationship or marriage. They can cover property division, superannuation, spousal maintenance, and liabilities such as joint debts.
They’re often referred to as “prenups” (before marriage) or “postnups” (after marriage), but they can also be used by de facto couples—people in committed relationships who aren’t legally married.
For a BFA to be valid and enforceable:
- Both parties must receive independent legal advice.
- The agreement must be in writing and signed by both parties.
- Each party’s lawyer must provide a certificate confirming advice was given about the effect of the agreement and the advantages and disadvantages.
When Should You Consider a BFA?
There are several key life stages or situations where a BFA is especially useful:
Before Marriage or Cohabitation
If one partner has significantly more assets, owns a business, or has received a large inheritance, a BFA can protect their interests. This is particularly relevant in second marriages or relationships where one party has children from a previous relationship.
During a Relationship
Sometimes, circumstances change after a relationship begins. For example, one partner may leave work to raise children or receive a financial windfall. Creating a BFA at this point can clarify financial expectations and protect both parties from future uncertainty.
After Separation or Divorce
A BFA can be used to finalise financial matters and avoid lengthy and costly court proceedings. It allows separated partners to agree on a fair division of assets without the stress of litigation.
Benefits of a Binding Financial Agreement
Certainty: You know exactly how your finances will be handled in the event of a split.
Privacy: Unlike court proceedings, a BFA is private.
Cost-effective: It can significantly reduce legal costs and emotional stress in the event of separation.
Flexibility: You and your partner control the terms—not a judge.
Final Thoughts
While it may feel uncomfortable to bring up, a Binding Financial Agreement can be a smart, respectful way to protect both partners. It’s not about planning for failure—it’s about protecting your future. Just like car insurance doesn’t mean you expect a crash, a BFA doesn’t mean you expect to break up. It simply means you’re prepared.
Ultimately, a BFA is about mutual understanding and transparency. Whether you’re in a new relationship or a long-standing partnership, discussing finances openly and honestly can actually strengthen your bond. A well-structured BFA ensures that if things do go south, both parties walk away with dignity and fairness.
Would you like help drafting example clauses or knowing what to ask a lawyer when creating a BFA?
Call us at James Noble Law on 1800 662 535 or email your enquiry to team@jamesnoblelaw.com.au for you free 20-minute consultation at any of our Brisbane, Gold Coast or Cairns locations.
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You may also like to know more information about the
- Binding Financial Agreements.
- How To create Airtight Binding Financial Agreements? How Tight Is An Airtight BFA?
- Binding Financial Agreements: Are they worth the paper they are written on?
- Binding Financial Agreement & Provisions of Family Law Act.
- Financial Settlement, Debt, and Home Loans. More Money. More Problems.
- Learn more about the Family court portal.
- Online Divorce application In Australia.
