Binding Financial Agreements

A Binding Financial Agreement, often referred to as a prenup, allows couples in New South Wales to formally record how their property, assets, liabilities, superannuation and spousal maintenance will be dealt with if a relationship ends. These agreements are made under the Family Law Act 1975 and provide a legally recognised way for parties to opt out of the Court’s jurisdiction in relation to property settlement and spousal maintenance.

Financial Agreements can be entered into before marriage or a de facto relationship, during the relationship, or after separation. When properly prepared, they offer certainty, reduce the risk of future disputes, and can avoid the cost, stress and delay of Family Court proceedings. They are commonly used where one or both parties wish to protect pre-existing assets, family wealth, business interests, trusts, or anticipated inheritances, or where parties want to clearly finalise their financial arrangements after separation.

To be binding and enforceable, a Financial Agreement must comply with strict legal requirements. The agreement must be in writing, signed by both parties, and each party must receive independent legal advice about the effect of the agreement and the advantages and disadvantages of entering it. Certificates confirming that advice must be exchanged. Failure to meet these requirements can leave an agreement open to challenge.

A Binding Financial Agreement can also be used to exclude or release future spousal maintenance claims, providing long-term certainty where appropriate. In some cases, Financial Agreements are used when court time limits have expired or where parties wish to finalise arrangements without seeking court approval.

Because Financial Agreements can be set aside in limited circumstances, such as non-disclosure, fraud, undue influence or significant hardship, it is essential that they are carefully drafted and tailored to the parties’ individual circumstances.