By Mary Stephan, Principal Solicitor

"We signed a Binding Financial Agreement before we got married. I'm protected, right?"

If it was done correctly - absolutely. Binding Financial Agreements are one of the most powerful financial planning tools available to Australian couples, providing certainty, control, and protection when relationships end. But like any powerful legal instrument, they must be executed properly.

In November 2025, the High Court delivered a decision that highlighted what happens when BFAs are done wrong - and why getting expert legal advice matters so much. The case involved a BFA that failed, not because the concept is flawed, but because the execution was defective.

A Binding Financial Agreement (BFA) - sometimes called a prenup in casual conversation - allows you to privately agree on property division if your relationship ends. Rather than leaving everything to court discretion years later during an emotionally charged separation, you make clear, rational decisions now about protecting assets, providing certainty, and ensuring fairness.

This guide explains how to ensure your BFA actually delivers the protection you're seeking.

What Is a Binding Financial Agreement and Why Get One?

A Binding Financial Agreement is a private contract under the Family Law Act 1975 that determines how property, assets, debts, and sometimes spousal maintenance will be divided if your relationship ends.

The power of a BFA: When properly executed, it prevents either party from applying to the Federal Circuit and Family Court for property orders. Your agreement controls the outcome, not a judge's discretion years later when emotions are running high and circumstances have changed.

BFAs can be made:

• Before marriage (Section 90B of the Family Law Act)

• During marriage (Section 90C)

• After separation or divorce (Section 90D)

• Before, during, or after de facto relationships (Sections 90UB, 90UC, 90UD)

Why couples choose BFAs:

Financial Certainty - You know exactly what happens to your assets if you separate, providing peace of mind and clear expectations for both parties.

Asset Protection - Protect pre-relationship assets, expected inheritances, business interests, and wealth you've built independently.

Privacy - Keep your financial affairs private rather than having details aired in public court proceedings.

Reduced Conflict - When separation occurs, property division is already determined, reducing the scope for disputes and expensive litigation.

Control - You decide outcomes based on what's fair for your circumstances, not a court applying standardized principles that may not fit your situation.

Business Protection - Safeguard businesses and professional practices from being divided or disrupted by relationship breakdown.

Children from Previous Relationships - Ensure assets intended for your children remain protected and available for them.

The key is doing it right - with experienced lawyers, proper execution, and appropriate updating as circumstances change.

November 2025 High Court Case: Why Quality Matters

The High Court's decision in R Lawyers v Mr Daily [2025] HCA 41 demonstrates why the quality of legal advice and drafting is absolutely critical.

What happened:

Between 2002 and July 2005, R Lawyers provided advice to Mr Daily and prepared a BFA before his marriage to Ms Daily. The couple signed the agreement around July 21, 2005, married later that year, had two children (born 2006 and 2009), and separated in September 2018.

When Ms Daily applied to set aside the BFA in December 2019, the court granted her application and set it aside.

Mr Daily then sued R Lawyers for negligence. Courts found that R Lawyers had breached their duty of care in the BFA's preparation. However, the High Court ruled that while R Lawyers was negligent, Mr Daily couldn't prove financial loss beyond wasted litigation costs because he provided no evidence of what a properly drafted BFA would have contained.

The lesson: This case isn't an argument against BFAs - it's an argument for using experienced family lawyers who specialize in these agreements. A properly drafted BFA by the right lawyer would have provided Mr Daily the protection he sought. The failure was in execution, not concept.

Landmark Case Established Important Protections

Thorne v Kennedy [2017] HCA 49 is the High Court decision that established critical protections ensuring BFAs are made fairly.

The High Court set aside a BFA on the basis that the circumstances surrounding its execution constituted unconscionable conduct. This decision protects people from being taken advantage of and ensures BFAs are made in circumstances where both parties have genuine choice and understanding.

What this means for you: The law protects against unfair BFAs. Courts examine whether agreements were made in fundamentally fair circumstances - providing confidence that properly executed BFAs will be upheld, while those made under pressure or unfair conditions won't be.

What Makes a BFA Legally Binding?

The Family Law Act sets clear requirements ensuring BFAs are made with full knowledge and proper advice. Section 90G (married couples) and Section 90UJ (de facto couples) require:

1. Written and Signed by Both Parties

Your agreement must be in writing with both signatures.

2. Independent Legal Advice

Each party receives independent legal advice from separate lawyers about:

• The effect of the agreement on their legal rights

• The advantages and disadvantages of making the agreement

This ensures both parties fully understand what they're agreeing to.

3. Signed Lawyer's Statement

Each party's lawyer provides a signed certificate confirming they gave the required advice - protecting both parties and creating proper documentation.

4. Exchange of Certificates

Each party receives a copy of the other party's lawyer's certificate - ensuring transparency in the process.

5. Voluntary and Current

The agreement must not have been terminated by the parties or set aside by a court.

These requirements protect both parties - ensuring BFAs are made with full knowledge, proper advice, and genuine consent. When followed correctly, they create enforceable agreements that provide lasting protection.

When Can BFAs Be Challenged in Australia?

Courts have power under Section 90K (married couples) and Section 90UM (de facto couples) to set aside BFAs in specific, limited circumstances. Understanding these grounds helps you ensure your BFA is structured to withstand challenge:

Fraud or Non-Disclosure

Full financial disclosure is essential. If one party concealed assets or debts, the BFA can be challenged. Solution: Provide complete disclosure of all assets, debts, superannuation, business interests, and expected inheritances when making your BFA.

Unconscionable Conduct

Following Thorne v Kennedy, if one party took unconscionable advantage of the other, courts will intervene. Solution: Ensure adequate time for both parties to obtain advice, negotiate terms, and sign voluntarily without pressure.

Hardship Relating to Children

If circumstances relating to children's care, welfare, and development have changed materially since the BFA was made, and enforcing it would cause hardship, courts may set it aside. Solution: Include provisions addressing potential children, or plan to review your BFA after children are born.

Impracticality

If circumstances have changed so dramatically that carrying out the BFA has become impractical, courts may intervene. Solution: Review and update your BFA as major life changes occur.

Understanding these grounds helps you create a robust BFA - one that accounts for potential challenges and is structured to remain enforceable even as circumstances evolve.

How to Create an Enforceable BFA: Best Practices

1. Use Experienced Family Lawyers

This is the most critical factor. Both parties need separate lawyers with specific expertise in Binding Financial Agreements. Experienced family lawyers understand the technical requirements, recent case law, and how to draft agreements that withstand future scrutiny.

Don't cut corners here - the difference between a BFA that protects you and one that fails often comes down to lawyer quality.

2. Start Early - Give Yourselves Time

Raise the BFA conversation months before any wedding, allowing proper time for:

• Both parties to obtain independent legal advice

• Negotiation of terms that work for both parties

• Reflection and genuine decision-making without time pressure

• Voluntary agreement free from the stress of imminent deadlines

3. Provide Complete Financial Disclosure

Both parties must fully disclose all financial circumstances:

• All assets (property, savings, investments, superannuation)

• All debts and liabilities

• Business interests and valuations

• Expected inheritances

• Any other financial resources

Keep detailed records of your disclosure to protect against future fraud claims. Transparency strengthens your BFA.

4. Draft Clear, Specific Terms

Vague language creates uncertainty risk. Your BFA should:

• Specifically identify each asset and how it will be treated

• Clearly state division percentages or amounts

• Use unambiguous language throughout

• Address what happens with jointly acquired property during the relationship

• Specify how debts will be allocated

5. Plan for the Future

Strong BFAs contemplate foreseeable changes:

• What happens if you have children?

• How are significant inheritances during the marriage treated?

• What if one person must stop working for health reasons?

• How are major assets acquired together handled?

• Should the BFA be reviewed after certain milestones?

6. Ensure Voluntary Agreement

Both parties should sign voluntarily, with full understanding, and without pressure. Document that both parties had:

• Adequate time for consideration

• Independent legal advice

• Genuine choice to agree or refuse

• Complete understanding of implications

7. Review and Update as Life Changes

Consider including review provisions in your BFA:

• Every 5 years

• After children are born

• After significant inheritances

• After major asset acquisitions

Life changes - your BFA can change too, ensuring it remains appropriate for your circumstances.

Should You Get a BFA? Smart Financial Planning for Your Relationship

Binding Financial Agreements aren't just for the ultra-wealthy - they're practical financial planning tools for anyone who wants clarity, protection, and control over their financial future.

BFAs Provide Valuable Protection When:

You Have Pre-Relationship Assets Whether it's property, savings, or investments you built before the relationship, a BFA ensures what you created independently remains protected. This isn't about distrust - it's about smart financial planning.

You Expect Inheritance Protect family wealth and ensure inheritances stay with intended beneficiaries. A BFA can specify that inherited assets remain separate property, honoring your family's wishes.

You Own a Business or Professional Practice Safeguard businesses from being valued, divided, or disrupted during relationship breakdown. BFAs protect not just your financial interest but your livelihood and employees' jobs.

You Have Children from a Previous Relationship Ensure assets earmarked for your children's future are protected. A BFA provides certainty that you can fulfill commitments to children from your first family.

You're Entering a Second Marriage Protect what you built during your first marriage while creating fair arrangements for your new relationship. BFAs allow blended families to navigate complex financial situations with clarity.

You Want Financial Certainty and Control Rather than leaving property division to court discretion years later during an emotionally charged separation, you make clear, rational decisions now about fair outcomes. BFAs reduce uncertainty and provide peace of mind.

You Value Privacy BFAs keep your financial affairs private. Court proceedings become part of the public record - your BFA remains confidential between you, your partner, and your lawyers.

There's Wealth Disparity When one partner has significantly more assets, a BFA provides clarity for both parties about expectations and outcomes. This actually strengthens relationships by removing financial uncertainty.

BFAs May Not Be Necessary When:

• Neither party has significant separate property

• You're both entering with similar financial positions

• You're comfortable with standard Family Law Act property division principles

But even in these situations, BFAs can provide valuable certainty and avoid future disputes about who contributed what and how property should be divided.

The Reality: Most Relationships Don't Last Forever

Nobody wants to think about relationship breakdown when planning a wedding or moving in together. But the statistics are sobering - significant numbers of marriages and de facto relationships end in separation.

A BFA isn't pessimistic - it's realistic financial planning. You insure your home, your car, your health. A BFA is insurance for your financial future. It doesn't predict failure - it provides protection and certainty regardless of what happens.

The best time to create a BFA is when you're both happy and agreeable - not during the stress and conflict of separation when positions become entrenched and negotiations difficult.

How June 2025 Family Law Amendments Make BFAs Even More Valuable

The Family Law Amendment Act 2024 took effect June 10, 2025, changing how courts assess property settlements. These changes make BFAs even more attractive:

Courts Now Consider:

• The economic effect of family violence on property division

• Material wastage of property or financial resources

• The nature and circumstances of liabilities and debts

What this means: Property settlements determined by courts have become more complex and unpredictable. Variables like alleged family violence, wastage claims, and debt disputes can significantly affect outcomes in ways that weren't explicitly considered before.

BFAs provide certainty - you decide outcomes based on clear terms you both agreed to, rather than navigating these new complexities during contested court proceedings.

Common Myths About BFAs in Australia - Debunked

Myth: "BFAs are only for rich people"

Reality: Anyone with assets to protect benefits from BFAs. Whether you own a modest investment property, have savings, or expect inheritance, a BFA provides valuable protection.

Myth: "Asking for a BFA means I don't trust my partner"

Reality: BFAs are financial planning tools, like wills or insurance. You make decisions now, when you're both agreeable, to prevent disputes later. Many couples find discussing a BFA actually strengthens their relationship by creating financial transparency.

Myth: "BFAs always get thrown out by courts"

Reality: Properly drafted and executed BFAs are regularly upheld by courts. Cases where BFAs are set aside typically involve defective drafting, non-disclosure, or unconscionable circumstances - all preventable with proper legal advice.

Myth: "We can download a template online"

Reality: DIY BFAs virtually never meet the strict technical requirements. Both parties need independent legal advice from separate lawyers - it's not just recommended, it's legally required for validity.

Myth: "Once we sign a BFA, it's set in stone forever"

Reality: BFAs can be reviewed and updated as circumstances change. You can make new BFAs that terminate old ones, or include review clauses in your original agreement.

Critical Steps for Creating an Enforceable BFA

1. Engage Experienced Family Lawyers - This Is Non-Negotiable

Both parties need separate lawyers with specific expertise in Binding Financial Agreements. This isn't an area for general practice lawyers or DIY approaches.

Why it matters: The R Lawyers v Mr Daily case involved solicitors whose defective work resulted in a failed BFA. If even lawyers can get it wrong, attempting to draft your own is almost guaranteed to fail. Experienced family lawyers know the technical requirements, understand recent case law, and draft agreements that withstand challenge.

Investment perspective: Yes, quality legal advice costs money upfront. But compared to the potential cost of contested court proceedings if your BFA fails - easily $30,000-$100,000+ in legal fees - proper drafting is exceptional value.

2. Start Early - Give Yourselves Adequate Time

Begin the BFA conversation months before any wedding or significant commitment. This allows:

• Proper time for both parties to obtain independent legal advice

• Thoughtful negotiation of terms that work for both parties

• Genuine reflection and decision-making without pressure

• Voluntary agreement free from time constraints

Why it matters: BFAs presented days before weddings create risk of unconscionable conduct findings. Courts scrutinize whether both parties had genuine choice. Starting early eliminates this risk entirely.

3. Complete Financial Disclosure - Total Transparency

Both parties must fully disclose all financial circumstances:

• All assets (property, savings, investments, superannuation, business interests)

• All debts and liabilities

• Expected inheritances

• Income and earning capacity

• Any other financial resources

Why it matters: Non-disclosure is one of the most common grounds for setting aside BFAs. Full transparency when making your agreement protects its enforceability years later.

Best practice: Exchange detailed financial statements, keep records of disclosure, and update if circumstances change before signing.

4. Draft Clear, Specific, Unambiguous Terms

Your BFA should be crystal clear about:

• Exactly which assets go to which party

• How jointly acquired property during the relationship is treated

• Specific division percentages or amounts

• How debts are allocated

• What happens with superannuation

• Any spousal maintenance provisions

Why it matters: Vague language creates uncertainty risk. If a court can't determine what you actually agreed to, your BFA may be void for uncertainty.

Example of good drafting: "Property located at 123 Smith Street, Sydney NSW (currently valued at $1,200,000) shall be retained by Party A. Party B shall receive the investment portfolio held with XYZ Financial (currently valued at $300,000) plus a cash payment of $150,000 within 60 days of separation."

5. Address Foreseeable Changes

Strong BFAs contemplate future scenarios:

• What happens if you have children? Will provisions change?

• How are significant inheritances during marriage treated?

• What if one person must stop working?

• How are major jointly acquired assets (like upgrading to a larger family home) handled?

Why it matters: BFAs that don't contemplate major life changes - especially children - are vulnerable to hardship challenges. Planning ahead creates durability.

Consider: Including review clauses stating the BFA will be reviewed after children are born, every 5 years, or upon other specified events.

6. Proper Execution and Documentation

Ensure your BFA is:

• Signed by both parties

• Accompanied by lawyer's certificates for both parties

• Properly exchanged between lawyers

• Stored securely with copies for both parties

Why it matters: Technical compliance with Section 90G requirements is mandatory. Missing even one element makes the BFA non-binding.

Should You Get a BFA? Smart Financial Planning for Your Relationship

Binding Financial Agreements are practical financial planning tools for anyone who wants clarity, protection, and control over their financial future.

BFAs Provide Valuable Protection When:

You Have Pre-Relationship Assets Property, savings, or investments you built independently deserve protection. A BFA ensures what you created before the relationship remains yours - smart planning, not distrust.

You Expect Inheritance Protect family wealth and honor your family's intentions. BFAs ensure inheritances stay with intended beneficiaries rather than being divided in a future separation.

You Own a Business or Professional Practice Safeguard your business from being valued, divided, or disrupted by relationship breakdown. BFAs protect your livelihood, your business partners, and your employees' jobs.

You Have Children from a Previous Relationship Ensure assets earmarked for your children's future are protected. BFAs provide certainty you can fulfill commitments to your children.

You're Entering a Second Marriage Protect assets from your first marriage while creating fair arrangements for your new relationship. BFAs help blended families navigate complex financial situations with clarity.

You Want Financial Certainty and Control Make clear, rational decisions now about fair outcomes rather than leaving everything to court discretion years later during emotionally charged separation. BFAs reduce uncertainty and provide peace of mind.

You Value Privacy Keep financial affairs confidential. Court proceedings become public record - your BFA remains private between you, your partner, and your lawyers.

There's Wealth Disparity When one partner has significantly more assets, a BFA provides clarity for both parties about expectations. This actually strengthens relationships by removing financial uncertainty and preventing future disputes.

BFAs May Not Be Necessary When:

• Neither party has significant separate property

• You're both entering with similar financial positions

• You're comfortable with standard Family Law Act property division principles

But even in these situations, BFAs can provide valuable certainty and avoid future disputes.

The bottom line: If you have assets worth protecting - whether that's $200,000 or $20 million - a properly drafted BFA is one of the smartest financial decisions you can make.

Why BFAs Make Sense: The Practical Reality

Planning When You're Happy Makes Sense

The best time to create a BFA is when you're both happy, agreeable, and thinking clearly about the future. During separation, emotions run high, positions become entrenched, and reaching agreement becomes exponentially harder.

Creating a BFA early means making rational decisions together about fair outcomes - not fighting over property years later when trust has broken down.

BFAs Reduce Conflict and Legal Costs

Without a BFA, property settlements can involve:

• Lengthy court proceedings (18-24+ months)

• Extensive legal fees ($30,000-$100,000+ each)

• Stressful court appearances and disclosure processes

• Uncertainty about outcomes until final judgment

With a properly executed BFA, property division is already determined. You avoid these costs, stress, and uncertainty entirely.

BFAs Provide Business Continuity

For business owners and professionals, relationship breakdown without a BFA can mean:

• Business valuations and financial disclosure affecting operations

• Potential forced sale or division of business interests

• Disruption to business partners and employees

• Uncertainty affecting business decisions during separation

A BFA protects business continuity, providing certainty that your business won't be disrupted by personal relationship changes.

BFAs Honor Family Wealth and Inheritance Intentions

If your family has provided assets or you expect inheritance, a BFA ensures these remain with intended beneficiaries. This honors your family's wishes and protects intergenerational wealth.

How to Approach the BFA Conversation With Your Partner

Frame It as Financial Planning, Not Distrust

"I want us to have a BFA" sounds very different from "I want us to create clear financial arrangements that protect both of us and provide certainty for our future."

Emphasize that BFAs benefit both parties - providing clarity, reducing future conflict, and ensuring fair outcomes based on what you both agree is appropriate.

Be Transparent About Your Reasons

Explain clearly why you believe a BFA makes sense:

• "I have a business and my business partners want certainty it won't be affected by personal matters"

• "My family has provided assets I want to protect for my children from my first marriage"

• "I think having clear financial arrangements will actually strengthen our relationship by removing uncertainty"

Present It as a Joint Decision

Rather than presenting terms to sign, propose working together to create arrangements you both consider fair. This collaborative approach often results in better outcomes and stronger agreements.

Seek Advice Together, Then Separately

Consider starting with a joint initial consultation to understand the BFA process, then each obtaining separate independent legal advice as required by law.

June 2025 Family Law Amendments Increase BFA Value

The Family Law Amendment Act 2024 took effect June 10, 2025, introducing changes that make BFAs even more valuable:

Courts must now explicitly consider:

• The economic effect of family violence

• Material wastage of property or financial resources

• The nature and circumstances of liabilities

What this means: Court-determined property settlements have become more complex and less predictable. Allegations of family violence, wastage claims, and debt disputes can significantly affect outcomes in ways that create uncertainty.

BFAs provide certainty - you decide outcomes based on clear terms you both agreed to, rather than navigating these complexities during contested proceedings where outcomes are unpredictable.

What to Do If You Already Have a BFA

If you signed a BFA years ago, having it professionally reviewed provides valuable peace of mind:

Review for Enforceability

An experienced family lawyer should assess:

• Whether it meets all technical requirements

• Whether circumstances have changed materially

• How it would operate if you separated today

• Whether any grounds might exist to challenge it

Consider Updating

If your circumstances have changed significantly - children born, substantial assets acquired, career changes - consider whether your BFA should be updated to reflect current reality.

Updating is straightforward: You can make a new BFA that terminates the old one, provided you follow the same requirements as the original.

What If Your Partner Raises the BFA Topic?

See It as Positive Financial Planning

Your partner raising the BFA conversation shows they're thinking seriously about building a life together while being realistic about protecting both parties' interests.

Get Your Own Independent Advice

This is legally required and protects you. Your lawyer works solely for you and will explain:

• What you're giving up by signing

• What you'd be entitled to without a BFA

• Whether the proposed terms are reasonable

• Potential risks or concerns

Take Your Time

You're entitled to adequate time to understand the agreement, obtain advice, and make an informed decision. Don't feel pressured to sign quickly.

Negotiate Terms

BFAs are negotiable. If proposed terms don't work for you, discuss modifications. The goal is an agreement both parties consider fair.

You Can Decline

You cannot be forced to sign a BFA. If you're fundamentally uncomfortable, you have the right to refuse.

Frequently Asked Questions

Are Binding Financial Agreements legally enforceable in Australia?

Yes - when properly drafted and executed according to Family Law Act requirements, BFAs are legally enforceable and regularly upheld by courts.

Do we both need separate lawyers?

Yes. Independent legal advice from separate lawyers is legally required for a BFA to be valid. This protects both parties and ensures informed consent.

Can a BFA protect my inheritance?

Yes. BFAs can specify that inheritances remain separate property and aren't divided upon separation.

What if we have children after signing a BFA?

If your BFA contemplates children and includes appropriate provisions, it remains enforceable. If it doesn't address children and circumstances have changed materially, there may be grounds to challenge it - which is why planning for potential children is important.

How much does a BFA cost in Sydney?

Costs depend on complexity and asset values. For straightforward matters, expect costs in the range of a few thousand dollars per party. Complex estates with businesses, trusts, and substantial assets cost more. Remember both parties need separate lawyers.

Can we update our BFA later?

Yes. You can make new BFAs that terminate previous ones, provided you follow the same legal requirements. Many couples review and update BFAs as major life changes occur.

Get Expert Legal Advice on Binding Financial Agreements in Sydney

Creating an enforceable Binding Financial Agreement requires experienced legal guidance. The difference between a BFA that protects you and one that fails when you need it most comes down to the quality of advice and drafting you receive.

Mary Stephan provides strategic counsel on Binding Financial Agreements throughout Sydney and NSW. With a Master of Applied Law in Family Law and extensive experience in the Federal Circuit and Family Court of Australia, Mary understands the technical requirements, recent High Court decisions, and practical considerations that determine whether BFAs succeed or fail.

Whether you're considering a BFA to protect assets, need an existing agreement reviewed, or want to update a BFA to reflect changed circumstances, Mary provides expert guidance grounded in both legal knowledge and courtroom experience with these agreements.

Contact Stephan & Co Lawyers:

*This article is for general information purposes and does not constitute legal advice. Binding Financial Agreements involve complex legal requirements and individual circumstances vary significantly. Always seek professional legal advice from an experienced family lawyer before entering into or relying on a BFA.