Understanding prenups: what are they and why they matter
Talking about money in a relationship isn’t always comfortable. Whether you’re moving in together, planning a wedding, or already well into your partnership, conversations about finances can feel awkward...or even unromantic.
For many people, the idea of a “prenup” still feels like something reserved for celebrities, high-net-worth individuals, or Hollywood storylines. But in reality, that couldn’t be further from the truth.
Today, more everyday couples are choosing to have these conversations early, not because they expect things to go wrong, but because they value clarity, transparency, and protecting what matters to them.
But here’s the truth: clear expectations can protect your relationship, not harm it.
In Australian family law, the tool designed to give couples that clarity and protection is the Binding Financial Agreement (BFA). And despite the stereotypes, BFAs aren’t just for celebrities or millionaires...they’re for anyone who wants peace of mind.
Let’s break down what BFAs really are, how they work, and why more couples are choosing them.
What is a Binding Financial Agreement?
A Binding Financial Agreement (BFA) is a legally enforceable contract that sets out how a couple’s assets, liabilities, and financial resources will be divided if the relationship ends.
Unlike the name “prenup” suggests, a BFA isn’t just for couples about to marry.
You can enter into one:
- before a marriage or de facto relationship (the classic “prenup”)
- during the relationship
- after separation.
Essentially, it’s a roadmap for “who gets what” if things don’t go to plan, designed to reduce conflict, protect assets, and create certainty.
What makes a BFA legally valid?
Creating a BFA isn’t as simple as writing out an agreement on a notepad and signing it together. There are strict requirements, and missing even one can make the agreement invalid.
Here’s what’s essential:
- It must be in writing and signed by both parties. No verbal agreements. No shortcuts.
- You both must receive independent legal advice. Each person must have their own lawyer who explains:
- the advantages of the agreement
- the disadvantages of the agreement
- how the agreement will impact their rights.
- Full and honest financial disclosure. Transparency is key. Concealing assets can result in the agreement being set aside later.
- It must comply with the Family Law Act 1975. This ensures the document meets all legal requirements, another reason why BFAs should always be drafted by experienced family lawyers.
Why consider a BFA?
BFAs often get a bad reputation, but in reality, they can strengthen a relationship by reducing uncertainty.
Here’s what they can offer:
Financial autonomy and control
- Instead of relying on a court to decide how assets will be split, you and your partner make those decisions yourselves.
Protection of significant assets
They’re invaluable if you want to protect:
- property owned before the relationship
- inheritances
- family wealth
- business interests
- savings or investments.
Reduced conflict if the relationship ends
- Breakups are hard enough. A BFA can prevent lengthy and expensive disputes—saving both money and emotional strain.
What are the risks or limitations?
Like any legal tool, BFAs come with considerations:
They can be overturned
A court may set aside a BFA if:
- it’s deemed unfair
- one party was pressured or coerced
- significant changes occur (especially related to children)
- there wasn’t full disclosure at the time of signing.
They are legally technical
BFAs must be drafted with precision. A poorly drafted agreement is almost guaranteed to fail when it’s needed most.
Key tips for creating a strong, fair BFA
- Work with experienced family lawyers
BFAs require legal expertise. A specialist family lawyer ensures your agreement is enforceable and tailored to your circumstances.
- Review the agreement over time
Life changes, and so should your agreement. A new baby, a business change, health issues, or an inheritance may require the BFA to be updated.
- Approach negotiations openly and honestly
A BFA shouldn’t feel like a battle. Transparency, fairness, and mutual respect lead to an agreement that both parties can feel confident about.
A Binding Financial Agreement is more than a legal document—it’s a proactive step toward protecting your financial future and reducing uncertainty. Whether you're entering a relationship, already in one, or navigating a separation, a BFA provides clarity, autonomy, and peace of mind.
If you’re considering a BFA, it’s essential to get personalised advice from a family lawyer who understands your rights, obligations, and goals.
At Parker Coles Curtis, we help individuals and couples craft BFAs that are fair, valid, and tailored to their unique circumstances. If you’re thinking about putting one in place, or simply want to understand your options, we’re here to guide you every step of the way.