By Carmel Morrison, Accredited Family Law Specialist at MST Lawyers
Let’s talk about Binding Financial Agreements—also known as BFAs, financial agreements, or what most people call prenups. While the term “prenup” is more familiar, these agreements aren’t just for people about to walk down the aisle. BFAs can be made at any stage—before, during, or after a marriage or de facto relationship. That includes same-sex relationships as well.
At MST Lawyers, we recently held a webinar to unpack exactly how these agreements work, when they should be used, and how they can offer both protection and peace of mind. As an Accredited Family Law Specialist, I’ve seen first-hand the stress that can be avoided when people take the time to set up proper arrangements around their finances. This blog will walk you through the key messages from that webinar—especially for those of you who are accountants, financial planners or advisers. You play an incredibly important role in helping clients navigate their financial futures.
What exactly is a Binding Financial Agreement?
In simple terms, a BFA is a legally binding agreement that sets out how a couple’s financial affairs will be handled if the relationship ends. That includes how assets will be divided, how debts will be managed, and whether financial support like spousal maintenance will be paid.
We can prepare these agreements at different points in a relationship. Some clients come to us before they even move in with their partner, wanting to protect their assets. Others might be already married or in a long-term relationship and have had a financial shift—like receiving an inheritance or selling a business—that they want to safeguard. We also prepare BFAs for couples who have already separated and are looking to formalise their property division without going to court.
There’s a growing awareness around BFAs, particularly in second or third relationships. Many people have already been through one difficult separation and want to avoid going through that again. They’ve learned the hard way, and they’re now more cautious. As the saying goes—bitten once, twice shy.
The benefits of a BFA
There are several key reasons why people choose to enter into a BFA. One of the main benefits is asset protection. A BFA can protect pre-relationship assets, inherited wealth (whether received already or anticipated in the future), and financial gifts or loans from family members.
BFAs also help reduce the emotional and financial stress of separation. They create certainty by outlining exactly how property will be divided, so couples can avoid protracted legal battles. When done properly, a BFA can reduce conflict, shorten the settlement process, and significantly cut down on legal costs.
Another advantage is control. Rather than leaving decisions about finances up to the Family Court, parties can agree in advance how things will be handled. That gives people peace of mind and allows them to focus on moving forward, rather than getting stuck in drawn-out litigation.
Legal requirements – doing it properly
Now, this is crucial: a BFA must comply with the Family Law Act. For married couples, that’s Part VIIIA. For de facto couples, it’s Part VIIIAB. The Act also applies to same-sex relationships.
Each party must get independent legal advice. This means they cannot use the same lawyer, even if they think it’ll save them time or money. Each party’s lawyer must sign a solicitor’s certificate, which is attached to the agreement. This certificate confirms that the client was given legal advice about the effect of the agreement and whether it’s in their best interests to sign it.
When BFAs aren’t prepared properly, they can be challenged—and that’s when it gets expensive. I’m currently dealing with a matter involving a poorly drafted BFA where we’re now facing two trials. That’s not a situation you want your client in.
When should people consider a BFA?
Here’s a helpful way to think about it. BFAs should be considered in any of these situations:
When someone is planning to enter a de facto relationship or marriage.
When someone is already in a relationship and their financial circumstances have changed.
When a person has received a significant inheritance or gift from family.
When parents are helping adult children into the property market and want to protect their contribution.
When someone is separating or has recently separated.
When there have been transactions that could be seen as attempts to defeat a potential family law claim (e.g., transferring shares or assets to family members).
It’s especially important for “second timers”—those entering a new relationship after a previous separation. These clients often have assets they want to protect and are understandably cautious.
What do BFAs cover?
A BFA can set out:
How assets and liabilities will be divided.
Who gets what property and how debts are shared.
What happens to financial support between the parties.
How future inheritances or gifts from family members will be treated.
And they’re flexible. A BFA can be updated if circumstances change—like the birth of a child, a change in financial position, or new assets being acquired. That’s why it’s important to see them not as a set-and-forget document, but as something that evolves with the relationship.
I’ve even drafted BFAs that account for things like frozen embryos in same-sex relationships. These are considered property under the Family Law Act, and they can be dealt with in a BFA.
How BFAs work alongside estate planning
BFAs aren’t just useful during separation—they also tie into estate planning. I work closely with our Wills and Estates team, particularly with Andrea Olsson, to make sure that our clients’ Wills and BFAs are aligned. We often see situations where clients want to ensure that an inheritance is protected during their lifetime and after their death.
For example, parents of adult children may want to leave them a significant inheritance but are worried that if their child separates, that money will form part of the asset pool to be divided. A well-drafted BFA can help quarantine that inheritance and keep it within the family.
What happens when a BFA and a Will conflict?
That came up during our webinar, and the answer really depends on the specific documents. Generally speaking, a BFA deals with separation, and a Will deals with death. But we sometimes see overlap—particularly when a Will promises something that a BFA excludes. That’s why it’s so important that the two documents are prepared with each other in mind. When in doubt, I work directly with the estate planning lawyer to ensure there’s no inconsistency.
The critical role of accountants and financial planners
Accountants and advisers are often the first point of contact. You’re the ones who know when a client is buying property, starting a new relationship, or getting help from family. That’s when the BFA conversation needs to start.
We rely on you for so many things—preparing asset lists, helping value businesses, identifying corporate structures, and advising on tax implications like capital gains tax or stamp duty. You also help ensure that clients comply with their financial disclosure obligations, which are essential under the Family Law Act.
A BFA can be overturned if there hasn’t been proper disclosure, or if the financial information provided is incorrect or incomplete. That’s why we may call on you to provide copies of tax returns, trust deeds, financial statements, or company records. It’s all part of building a solid agreement that will stand up if challenged.
What about the “Bank of Mum and Dad”?
It’s becoming more common for parents to help their kids get into the property market. They might transfer money directly or provide a “loan” that isn’t properly documented. And this is where things get messy. Unless there’s a clear and commercial loan agreement—with a repayment date, schedule of repayments, and terms that make it clear it’s a genuine loan—the court may treat it as a gift.
Even putting a caveat or mortgage on a property won’t necessarily protect the loan if the documentation isn’t right. The courts will look at whether the arrangement was commercial and properly executed.
A BFA can clarify whether the money is a loan or a gift and protect that contribution from being divided in a future separation.
What happens if a BFA is challenged?
BFAs aren’t ironclad, but they’re still very useful when done properly. A BFA can be challenged under limited circumstances, such as:
There was no proper legal advice given.
One party didn’t fully disclose their financial position.
One party was pressured, threatened, or manipulated into signing.
The agreement is found to be unconscionable or unfair.
There’s been a significant change in circumstances, such as the birth of a child with a disability.
The agreement contains ambiguous terms or hasn’t been drafted properly.
For example, if a lawyer refers their friend to act for the other party, and that lawyer simply visits their home, says “sign here,” and doesn’t give proper advice—that’s a red flag. Proper process matters. When I prepare a BFA, I provide clients with a thorough letter of advice and a clear paper trail. That’s what keeps these agreements strong.
Final thoughts and how MST Lawyers can help
At MST Lawyers, we offer more than just drafting. We can:
Review BFAs drafted by other firms to ensure they’re legally compliant.
Collaborate with accountants and planners to make sure the agreement aligns with tax, estate planning and financial strategies.
Help clients navigate complex situations and disputes involving BFAs.
My message to accountants and financial planners is simple: we need each other. You can’t give legal advice, and we can’t give financial advice—but together, we can offer our mutual clients a strong, supportive, and well-rounded service. If you ever need to run something past me, I’m more than happy to jump on a call, have a quick chat or set up a preliminary consultation.
Thanks again to everyone who joined us for the webinar. I hope you found it valuable. And if this article has raised any questions or you’d like to collaborate on a matter, please feel free to reach out.
Article by Carmel Morrison
Principal – Family Law and Accredited Family Law Specialist MST Lawyers
