A binding financial agreement (BFA) in Victoria, commonly known as a prenuptial agreement or ‘prenup’, is a private legal agreement between couples that sets out how property, debts and spousal maintenance will be dealt with if the relationship ends. And even though they’re often referred to as prenups, they can be made before, during or after a relationship.
We regularly assist married and de facto couples across Victoria who want clarity around assets, businesses, inheritances or family wealth before they take the next step. Used properly, a binding financial agreement can reduce uncertainty and the risk of later court proceedings. If not done correctly, it can be challenged.
In this guide, we take you through the important elements so you can decide on a binding financial agreement with confidence. We’ll cover:
- What a binding financial agreement is
- When you can make one in Victoria
- Who should consider one
- What it can and cannot cover
- What makes it legally binding
- How it compares to consent orders
- Why agreements sometimes fail
- What they typically cost and when to review them
If you would like tailored advice, our Family Law team can talk through your situation confidentially.
When can you make a binding financial agreement in Australia
A binding financial agreement can be made:
- Before marriage or before entering a de facto relationship (prenuptial)
- During the relationship
- After separation or divorce (postnuptial)
The law governing financial agreements is federal, meaning the same Family Law Act applies across Australia. In Victoria, we recommend seeking local advice to ensure the agreement accurately reflects your personal and financial circumstances.
Are binding financial agreements enforceable in Victoria?
Yes, provided they comply with the strict requirements of the Family Law Act. If properly prepared and executed, they are legally binding. However, the court retains the power to set an agreement aside in certain circumstances. That’s why careful drafting and proper legal advice are essential.
Do de facto couples in Victoria need a BFA?
De facto couples in Victoria have rights and obligations under the same federal law as married couples, provided their relationship meets the legal criteria. If you’re unsure whether your relationship qualifies, you can read more on our page about de facto relationships in Australia.
A binding financial agreement can be particularly helpful for de facto couples who are:
- Purchasing property together
- Contributing unequally to assets
- Entering a second long-term relationship
- Seeking clarity around existing wealth or business interests
Can a BFA be overturned after we sign?
A binding financial agreement can be set aside in limited situations. Common reasons include failure to disclose assets, pressure at the time of signing, or non-compliance with legal requirements. We explain these in more detail below.
Who should consider a binding financial agreement in Victoria?
Not every couple needs one. However, we commonly advise clients to consider a binding financial agreement in Victoria where there is:
- A business or professional practice that one party wishes to protect
- Significant assets brought into the relationship
- An expected inheritance or family trust structure
- A second marriage or blended family, where there is a desire to preserve assets for children from a previous relationship
- A de facto relationship involving property or financial interdependence
- A substantial income imbalance, particularly where one party may step out of the workforce
In many cases, it’s not about distrust. It’s about transparency and managing risk sensibly.
What can a binding financial agreement cover?
A binding financial agreement can address:
- Property (homes, investment properties, shares and other assets)
- Liabilities (mortgages, loans, credit facilities)
- Financial resources
- Superannuation
- Spousal maintenance
Without an agreement in place, either party may commence court proceedings after separation to seek a determination of how assets and liabilities should be divided. Court proceedings can be expensive, time-consuming and emotionally taxing.
A properly structured agreement may significantly reduce the likelihood of that occurring by setting expectations clearly in advance.
Can a BFA cover parenting arrangements?
Generally, no. Parenting arrangements are dealt with separately and must reflect the best interests of the child at the time. Financial agreements are primarily concerned with property and financial matters.
For independent information about property agreements, you may also wish to refer to the guidance provided by Victoria Legal Aid and the Federal Circuit and Family Court of Australia.
What makes a binding financial agreement legally binding?
For a binding financial agreement to stand up in court, it must be executed correctly in accordance with the Family Law Act 1975.
Key requirements include:
Independent legal advice for each party
Each person must receive advice from their own lawyer about the effect of the agreement and the advantages and disadvantages of entering into it.
Proper signing and certificates
The agreement must be signed by both parties, and the lawyers must provide signed statements confirming that they gave advice.
Full and frank disclosure
Both parties must disclose all assets and liabilities, including estimated values. When taking instructions, our team ensures our clients disclose their full financial position. Failing to include an asset, for example an interstate investment property or shareholding, may result in the agreement being set aside.
Entering into the agreement freely and voluntarily
There must be no undue pressure or coercion.
If these steps are not properly followed, the agreement may not be valid.
BFA vs consent orders – which should you use?
Both binding financial agreements and consent orders can formalise financial arrangements, but they are used in different circumstances.
Consent orders are commonly used after separation. The parties agree on a property settlement and apply to the court to have that agreement formalised. The court reviews the proposed orders to ensure they are just and equitable.
Binding financial agreements can be made before, during or after a relationship. They are not reviewed by the court at the time of signing, which is why strict compliance with legal requirements is critical.
As a general guide:
- If you’re planning ahead and managing risk early in a relationship, a BFA may be appropriate.
- If you have already separated and reached an agreement, consent orders are often the more common pathway.
The right option depends on timing, complexity and your objectives.
How much does a binding financial agreement cost in Victoria?
The cost of a binding financial agreement in Victoria varies depending on:
- The nature and value of the assets involved
- Whether there are companies, trusts or complex financial structures
- The level of negotiation required
- The urgency of the matter
As a broad rule, straightforward agreements may start at several thousand dollars per party, with more complex matters attracting higher fees. Each party must obtain independent legal advice, which means there are typically two sets of legal costs.
Fees will heavily depend on individual circumstances. Get a personalised quote from our experienced team.
How much does a binding financial agreement cost in Victoria?
Timeframes vary. A relatively straightforward matter may be finalised within a few weeks once full disclosure is provided. More complex agreements, particularly where there are businesses or negotiations involved, may take longer. It’s important to start the process well in advance of a wedding or major commitment to avoid unnecessary pressure.
Why are binding financial agreements challenged or set aside
While many agreements are upheld, courts may set aside a binding financial agreement in certain circumstances.
Common reasons include:
Non-disclosure or misleading information
If one party fails to disclose assets or liabilities accurately, the agreement may be vulnerable.
Practical tip: Ensure complete and documented disclosure from the outset.
Duress or undue pressure
Agreements signed shortly before a wedding or under emotional pressure may be scrutinised.
Practical tip: Commence discussions early and allow adequate time for consideration.
Inadequate independent legal advice
If the statutory requirements around advice are not strictly met, validity may be compromised.
Practical tip: Each party should have their own experienced family lawyer.
Significant change in circumstances
A major and unforeseen change, particularly involving children, may lead a court to consider whether enforcement would be unjust.
Practical tip: Review the agreement when major life events occur.
When should you review or update a binding financial agreement?
A binding financial agreement should not be filed away and forgotten.
Consider reviewing it if:
- You have a child
- You acquire or dispose of substantial assets
- You sell or restructure a business
- You receive a significant inheritance
- You relocate overseas
- Serious illness, injury or financial risk arises
As a practical approach, reviewing the agreement every few years or following a significant life event can help ensure it remains appropriate.
A sensible approach to financial certainty
A binding financial agreement in Victoria is not about expecting a relationship to fail. It’s about clarity and sensible planning.
For business owners, blended families and couples entering relationships with different financial positions, it can provide structure and reduce the risk of later disputes.
If you’re considering a binding financial agreement or are concerned that an existing agreement may be vulnerable, we can assist. Speak to one of our experienced family lawyers today.
