A Binding Financial Agreement, usually shortened to BFA, is a written contract between two people in a relationship that decides in advance how their property, superannuation and debts will be divided if they separate. It is made under the Family Law Act 1975 (Cth), and once it is binding it replaces the property settlement a court would otherwise impose.
If you have heard the words prenup, postnup or separation agreement, you have already heard about BFAs. Those are the everyday names. Binding Financial Agreement is the legal one, and it is the only one the legislation actually uses.
The short version
Without a BFA, a couple who separates and cannot agree on money ends up relying on the Family Law Act's default rules. A court looks at what each of you brought in, what you each contributed during the relationship, what your future needs are, and then decides what is just and equitable. That process is slow, expensive and unpredictable, and neither of you controls the outcome.
A BFA lets the two of you decide those questions yourselves, in writing, while you are still on the same side. If the relationship ends, the agreement says what happens, and a court will generally hold both of you to it.
Where BFAs come from
BFAs were introduced into the Family Law Act in 2000 for married couples and extended to de facto couples in 2009. They now sit in two parts of the Act:
- Part VIIIA covers people who are married or planning to marry. Sections 90B, 90C and 90D each deal with a different point in the relationship.
- Part VIIIAB covers de facto couples, including same-sex couples. Sections 90UB, 90UC and 90UD mirror the married sections almost word for word.
The idea behind both parts is the same. Ordinarily, a court has wide powers to alter property interests between partners under section 79 (married) or section 90SM (de facto). A binding financial agreement that deals with those matters takes that power away from the court, because the two of you have already dealt with them by contract.
What a BFA can cover
A BFA can deal with more than most people expect. The Act allows an agreement to cover:
- Property. The family home, investment properties, cars, savings, shares and anything else either of you owns, whether you brought it into the relationship or acquired it together. See how a BFA can protect your assets.
- Superannuation. Super is treated as property under the Act, and a BFA can say that each of you keeps your own, or set out how it is to be split. Superannuation in a BFA covers the mechanics.
- Debts. Mortgages, personal loans, credit cards and business borrowings, and who is responsible for each.
- Spousal maintenance. Whether one of you will support the other after separation and, if so, how much. The Act is strict here: a maintenance clause is only effective if it names the party and states the amount, and a court can still make a maintenance order if the person receiving it could not have supported themselves without a government pension at the time the agreement took effect.
- Future gifts and inheritances. A BFA can say that an inheritance or a family gift stays with the person who received it.
- Business interests. Shares in a company, an interest in a partnership or a family trust can all be quarantined.
There are two things a BFA cannot do. It cannot set parenting arrangements for children, and it cannot fix child support. Child support is dealt with under separate legislation and, if you want a private arrangement there, it needs its own binding child support agreement.
The three times you can sign one
The section of the Act that applies depends on where your relationship is at when you sign. When can you sign a BFA? goes into each in detail, but the outline is:
- Before marriage or before moving in together. Sections 90B and 90UB. This is the classic prenup, signed while you are contemplating marriage or a de facto relationship.
- During the relationship. Sections 90C and 90UC. Sometimes called a postnup. Couples use these when something changes, such as buying a home together, receiving an inheritance or starting a business.
- After separation or divorce. Sections 90C, 90D and 90UD. Here the agreement records the property settlement you have reached so that it is final and enforceable, without going to court.
The price and the process at myBFA are the same whichever stage you are at. Only the section reference in the agreement changes.
Prenup, postnup, separation agreement: one document, three names
It is worth saying plainly, because the terminology causes a lot of confusion. In Australia there is no separate legal instrument called a prenuptial agreement. What people call a prenup is a BFA made before marriage under section 90B. A postnup is a BFA made during the marriage under section 90C. A separation agreement is a BFA made after the relationship has ended.
They are all the same kind of document, with the same requirements and the same legal effect. BFA vs prenup has more on where the terms overlap and where they do not.
What makes a BFA binding
This is the part that matters most, because a financial agreement that is not binding is just a piece of paper. Section 90G sets out the test for married couples and section 90UJ does the same for de facto couples. The agreement is binding if, and only if:
- Both of you sign it.
- Each of you receives independent legal advice before signing. The advice has to come from an Australian legal practitioner and has to cover the effect of the agreement on your rights, and the advantages and disadvantages to you of signing it at that time.
- Each lawyer signs a statement confirming the advice was given. These are usually called advice certificates.
- The statements are exchanged. Each of you, or your lawyer, receives a copy of the other's signed statement.
- The agreement has not been terminated or set aside by a court.
The word "independent" is doing real work in that list. Each of you needs your own lawyer, from a different practice, advising you and only you. Independent legal advice for a BFA explains why the Act insists on this and what your lawyer will actually do.
The Act also gives a court a narrow discretion, under section 90G(1A), to declare an agreement binding even where the advice or certificate requirements were not fully met, if it would be unjust and inequitable not to. It is a safety net rather than something to rely on. What makes a BFA legally binding? walks through each requirement in more depth.
Full financial disclosure
Disclosure is not listed in section 90G, but it is just as important. Each of you needs to give the other an honest and complete picture of what you own, what you owe and what you earn before signing. That is partly because your lawyer cannot properly advise you about the advantages and disadvantages of the agreement without it, and partly because of what happens if you do not.
Under section 90K, a BFA can be set aside for fraud, and the Act says in terms that fraud includes non-disclosure of a material matter. An agreement built on an incomplete asset list is an agreement at risk.
Can a BFA be set aside?
Yes, but only on the limited grounds in section 90K (or section 90UM for de facto couples). A court can set aside a BFA where:
- it was obtained by fraud, including non-disclosure of a material matter;
- it was made to defeat a creditor, or with reckless disregard for a creditor's interests;
- it is void, voidable or unenforceable under ordinary contract law, for instance because of duress or misrepresentation;
- circumstances have changed so that it is impracticable to carry out;
- there has been a material change in circumstances relating to a child of the relationship and a party would suffer hardship if the agreement stood;
- one party engaged in unconscionable conduct when the agreement was made; or
- a superannuation interest covered by the agreement is unsplittable or subject to a payment flag.
What is not on that list is "I changed my mind" or "it turned out to be a bad deal for me". A properly made BFA is meant to be hard to escape, which is the whole point of having one. Can a BFA be overturned in court? looks at how the courts have applied these grounds.
BFA vs consent orders
If you have already separated, a BFA is not the only way to make your settlement final. Consent orders are orders made by the Federal Circuit and Family Court of Australia, on the application of both parties, that record the agreement you have reached. They are only available once a relationship has ended, the court has to be satisfied the terms are just and equitable, and they do not require each of you to have a lawyer.
A BFA, by contrast, can be made at any stage, does not go before a court and is not subject to a fairness check. The trade-off is the mandatory legal advice for both of you. BFA vs consent orders sets the two side by side.
How much does a BFA cost?
It depends entirely on how you go about it. The traditional route involves each of you instructing a separate law firm. Each firm drafts or reviews, negotiates with the other, advises its own client and bills by the hour throughout. It is common for that to run into many thousands of dollars for the couple, and to take months.
myBFA works differently. The two of you complete the disclosure and the questions yourselves, online. The agreement is drafted from your answers. A separate independent Australian lawyer is then allocated to each of you to review it, advise you and sign your certificate. The whole thing is charged as one flat fee, with both lawyers inside it, and you can split the fee between you. The current price, and what is and is not included, is on our pricing page.
How do you actually get one?
The process at myBFA runs over a few days rather than a few months:
- Sign up and invite your partner. One of you opens the case and the other gets their own login.
- Answer the questions. What you each own, owe and earn, and how you want things divided. You can go at your own pace and change anything while drafting.
- Preview the agreement. You see the actual drafting before you pay for it.
- Each of you is advised by your own lawyer. They review the agreement, advise you and sign your certificate.
- Both of you sign. Signing happens online with identity verification, and the finished agreement is stored for both of you.
How it works has the full walkthrough, and how to get a BFA in Australia covers the same ground for anyone using a traditional firm.
Do you actually need one?
Not every couple does. If the two of you came into the relationship with roughly the same, have built everything together and would be happy with a roughly equal split, the Act's default rules might land in much the same place as an agreement would.
A BFA earns its keep when the default rules would not reflect what you both think is fair. The common situations are:
- one of you owns a home or has significantly more savings or super than the other;
- one of you is expecting an inheritance or a family gift;
- one of you owns a business, or has a stake in a family trust or company;
- either of you has children from a previous relationship whose inheritance you want to protect;
- one of you is bringing in significant debt; or
- you have been through a separation before and do not want to go through the same fight again.
If you are not sure, our two-minute quiz will give you an honest read. Do you need a BFA even if you are not wealthy? is worth a look too, because the answer is often yes.
Changing or ending a BFA
You cannot amend a BFA by crossing something out or signing an addendum. Under section 90J, a financial agreement can be ended in two ways: by a separate termination agreement, or by a new BFA that includes a clause terminating the old one. Both need independent legal advice for each of you again, in the same way as the original. How to replace or cancel a BFA explains the options.
The bottom line
A Binding Financial Agreement is the Australian legal name for a prenup, a postnup or a separation agreement. It lets a couple decide for themselves how property, super and debts will be dealt with if they separate, instead of leaving that to a court later on. To be binding it has to be in writing, signed by both of you, with independent legal advice for each of you from separate lawyers and a signed certificate from each. Done properly, it is hard to set aside, which is exactly what you want from it.
