Can a Binding Financial Agreement be set aside?
Understand when a Binding Financial Agreement may be challenged or set aside, including legal advice, disclosure, pressure, duress and unconscionable conduct.
Read article →Binding Financial
Agreements
Financial certainty, whatever the future holds.
A Binding Financial Agreement is a private legal contract made under the Family Law Act. It lets you agree in advance how finances will be handled if your relationship ends - or formalise a settlement after separation. Done properly, it removes the Court from the equation entirely.
- Available
Before, during or after
- Independent advice
Required for each party
- Can cover
Property, super, maintenance
- Risk when
Position not disclosed
What a binding financial agreement means.
A binding financial agreement is a private legal arrangement that can deal with how property, financial resources or maintenance will be managed if a relationship ends or has already ended.
Financial agreements can be made before, during or after a marriage or de facto relationship and are often used for asset protection, family wealth planning or post-separation settlement.
Independent legal advice is required. A financial agreement should not be signed unless each party has received independent legal advice about the effect of the agreement and the advantages and disadvantages of entering into it.
Disclosure is strongly recommended.
Full and frank financial disclosure is strongly recommended and included in the Family Law Act. If a party does not properly understand the other party's financial position, the agreement may be more vulnerable to challenge. Disclosure should usually include assets, liabilities, income, superannuation, business interests, trusts, companies, inheritances, loans and other financial resources.
Our approach
Financial Agreements require technical precision.
A Binding Financial Agreement is only as strong as the care taken in preparing it. Poor drafting, inadequate disclosure, procedural errors or pressure at the time of signing are among the most common reasons agreements are successfully challenged - often years after they were signed.
Relationship-stage advice.
We advise on agreements before, during or after marriage or de facto relationships - each stage has different rules.
Asset protection focus.
We help identify the financial interests that need careful treatment in the drafting.
Consent order comparison.
We help you understand whether a BFA or another pathway may be more suitable for your situation.
Careful execution.
We guide the signing and advice process so the strict procedural requirements are properly met.
How it works
The Binding Financial Agreement process.
Every financial agreement depends on the relationship stage, asset structure, level of disclosure, timing and purpose of the agreement.
01
Identify the purpose
Clarify whether the agreement is being considered before, during or after a relationship.
02
Review financial circumstances
Consider assets, liabilities, superannuation, businesses, trusts, income and financial resources.
03
Assess risks & alternatives
Consider whether a BFA is suitable, or whether consent orders may be more appropriate.
04
Draft or review the agreement
Prepare the agreement (or review proposed terms) with careful attention to risk and enforceability.
05
Independent legal advice
Explain the effect of the agreement and the advantages and disadvantages before signing.
06
Formalise & move forward
The agreement is completed, independent legal advice requirements are met, and you can move forward knowing your arrangements are documented and protected.
In more detail
What you should know.
Three issues decide whether a financial agreement actually does its job - and each one is usually tested years after the document is signed.
Independent legal advice is not a formality.
Each party must receive independent legal advice from their own lawyer before signing - about the effect of the agreement on their rights and the advantages and disadvantages of entering into it. One lawyer cannot advise both parties.
Why it matters
The advice requirements go to whether the agreement is binding at all. Each lawyer usually provides a signed statement confirming the advice was given, and a copy is generally provided to the other party or their lawyer.
The wedding-pressure problem
Agreements signed shortly before a wedding are more vulnerable to claims of duress, undue influence or unconscionable conduct - particularly where one party believed the wedding would not proceed unless they signed.
Build in time for
- Full financial disclosure
- Independent advice for each party
- Questions & proposed amendments
- Exchange of the final document
- Signing free of pressure
- The lawyers' signed statements
Key point
Start early - if the wedding is imminent, it may be safer to defer the agreement and make it during the marriage instead.
When an agreement can be set aside - or needs updating.
An agreement is not set aside merely because one party later regrets signing it or considers it unfair. But the Court keeps the power to set a financial agreement aside on specific grounds.
The recognised grounds
These include fraud (including non-disclosure of a material matter), conduct making the agreement void, voidable or unenforceable, impracticability, a material change in circumstances relating to a child that causes hardship, and certain superannuation issues.
Changing it later
A financial agreement cannot be varied informally by emails or verbal arrangements. Ending or replacing it generally requires a properly drafted termination agreement or a new financial agreement - with independent legal advice again.
Common challenge grounds
- Fraud or material non-disclosure
- Duress or undue influence
- Unconscionable conduct
- Defeating creditors' interests
- Impracticability since signing
- Child-related change causing hardship
Key point
Review the agreement when major life events occur - especially the birth of children - so it can be replaced if it no longer works.
BFA or consent orders - two different tools.
Both can formalise financial arrangements, but they operate in different ways - and the right choice depends on your relationship stage and what you are trying to achieve.
Consent orders
Orders made by the Court after the parties reach agreement, usually after separation. The Court must be satisfied the property orders are just and equitable before making them, and once made they are enforceable Court orders.
Financial agreements
A private contract that is not approved by the Court when it is made and is not required to be fair. That is why the drafting, disclosure, advice and signing process carry so much weight.
A BFA may suit where you want to
- Agree before marriage or cohabitation
- Quarantine pre-relationship assets
- Protect family wealth & inheritances
- Deal with business or trust interests
- Contract out of future claims
- Keep arrangements private
Key point
After separation, consent orders are often the more appropriate pathway for a final property settlement - we help you compare both before you commit.
Frequently asked questions
Advice from our family law team.
What can a Binding Financial Agreement cover?
A financial agreement can deal with property, financial resources, liabilities, superannuation and spousal maintenance - including how assets will be retained or divided if the relationship ends. Parenting arrangements and child support are generally dealt with separately, through parenting plans, parenting orders or child support arrangements.
When can a Binding Financial Agreement be made?
For married couples, a financial agreement may be made before marriage, during marriage or after divorce. For de facto couples, it may be made before, during or after the relationship. The correct legal basis depends on your circumstances, so relationship status and timing should be confirmed before drafting begins.
Can a Binding Financial Agreement prevent future property claims?
A properly prepared agreement can limit or prevent future property and spousal maintenance claims in relation to the matters it covers, provided it is binding and has not been set aside. That protection depends on the quality of the drafting, the disclosure and the circumstances of signing - generic or rushed agreements are rarely suitable.
Can de facto and same-sex couples make financial agreements?
Yes. The Family Law Act allows financial agreements between de facto partners, including same-sex couples, before, during or after the relationship. Some additional requirements apply - including where the parties ordinarily live - so advice should be obtained on the correct framework.
Do we need to do anything at separation for the agreement to operate?
Usually, yes. For most agreements made before or during a relationship, a separation declaration generally needs to be signed before the agreement takes effect in relation to property or maintenance - stating that the parties have separated and there is no reasonable likelihood of resuming cohabitation.
Can a financial agreement release future spousal maintenance?
Yes - usually after separation, in exchange for a satisfactory property settlement, as a financial "clean break". A maintenance release may not be effective if the party giving it up cannot support themselves without an income-tested pension, allowance or benefit, so specific advice is needed.
Are there situations where a financial agreement may not be appropriate?
Yes. A financial agreement may not be appropriate for couples intending to have children, where neither party has significant assets, where it one-sidedly quarantines all of one party's wealth, or where it is being prepared shortly before a wedding. Part of our role is to advise against an agreement where that is our honest assessment.
What happens to a financial agreement if one of us dies?
A binding financial agreement continues to operate despite the death of a party and binds that party's personal representative. It is generally sensible for both parties to keep Wills that are consistent with the agreement's terms.
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