Binding Financial Agreements (BFA): Your Complete Guide

What is a BFA?

A legally binding contract that outlines how a couple's financial assets, liabilities and resources will be managed if the relationship breaks down. It can be entered into before the relationship (prenuptial), during the relationship, or after separation or divorce.

Why enter into a BFA

To protect assets one party brings into the relationship; to gain financial clarity and security about how assets and liabilities will be divided; to avoid lengthy and costly court proceedings; and to support estate planning by ensuring assets are distributed according to your wishes.

Legal requirements for enforceability

Both parties must receive independent legal advice; lawyers must sign certificates confirming that advice was given; the agreement must be in writing and signed by both parties; and both parties must provide full financial disclosure.

Grounds for overturning a BFA

Fraud or non-disclosure — if a party fails to fully disclose their financial circumstances, the agreement can be set aside. Duress, undue influence or coercion — the court may declare the agreement invalid if a party was pressured. Unconscionable conduct — excessively one-sided terms may be challenged. Significant changes in circumstances — such as the birth of a child or a major financial change.

Key case law

Thorne v Kennedy [2017] HCA 49 — the High Court set aside a BFA where the wife had signed under duress and undue pressure, having been threatened with cancellation of the wedding. Hoult & Hoult [2013] FamCAFC 109 — overturned due to insufficient financial disclosure.