What is a prenuptial agreement?

Prenups (in Australia referred to as Binding Financial Agreements) are made prior to marriage. They determine the individual & shared assets of the couple, and the distribution of those assets in the event of separation or divorce.[1] For example, common terms in such an agreement might state that all assets acquired in the duration of the relationship are to be split evenly, while ownership over individual assets acquired prior to the marriage is retained by each partner.

Binding Financial Agreements (‘BFAs’) however, can cover a much broader set of circumstances than commonly imagined by a mere prenup, including financial maintenance for one or both spouses during the marriage.[2] In other words, BFAs aren’t just used in the case of separation.

Are prenuptial agreements and BFAs only for people who aren’t married?

Under the Family Law Act 1975 similar binding financial agreements may be entered into before, during and after marriage.[3] Financial agreements are also available for de-facto relationships[PC1].[4] Binding financial agreements may be drafted regardless of relationship length or duration.

Why do couples enter prenuptial agreements and BFAs?

Prenuptial agreements are beneficial for a variety of reasons, including:

  • Binding agreement: This means that each party must comply with the terms reached in the agreement.[5]  Legal enforceability can ensure that promises made before marriage are kept in the event of separation or divorce.
  • Ability to account for all property (assets and debts): This may include superannuation, mortgages, student debt, or properties. Because of this, prenuptial agreements should be considered by couples in a range of circumstances (not just the Bill & Melinda Gates’ of the world!)
  • Protection: Prenuptial agreements minimise the risk of losing important assets, such as sentimental objects or personal businesses to your ex-partner amid separation.
  • Easier divorces and separations: Prenuptial agreements set out the financial ‘rules’ of the separation or divorce. In turn,, this can ensure a more amicable, quicker & cheaper separation.

Is asking for a prenup or similar agreement hurtful to my partner?

Perceptions on prenups have shifted in recent years, especially amongst younger demographics who are entering binding financial agreements in much larger numbers than older Australian couples.[6] Although financial agreements may have once been socially considered inappropriate in the context of romantic relationships – in reality, once the agreement has been put in place there is no further thought, or work required by either partner in the relationship (unless you choose to update the agreement). Prenuptial and other binding agreements create certainty and serve as a catalyst for open communication. Due to this, prenups can actually strengthen trust and transparency in relationships!

When do these agreements come into effect?

Prenups and BFAs may come into effect upon divorce, at the time of separation, or at a specified time during the marriage relationship where the agreement states financial maintenance payments are to be made.[7] For de-facto separations, a written declaration is required for the agreement to come into effect.[8]

Are there situations where the prenuptial agreement or BFA won’t be binding?

Although these agreements are binding on you and your partner, there a variety of circumstances where the court will not enforce the agreement.[9] Including:

  • Improper drafting: Prenuptial agreements and binding financial agreements are legal documents and therefore will not be enforced by the court if they do not satisfy formality requirements (including independent legal advice) or are not sufficiently clear.[10]
  • Children: Agreements will not be enforceable where children are born (who are not accounted for by name in the agreement [11]), or where there are significant changes to the needs of a child after the agreement is drafted.[12]
  • Unconscionability: In basic terms, the court will not enforce a prenup where there are unfair circumstances surrounding the agreement.[13] For example, in Thorne v Kennedy, Mr Kennedy told his fiancé days before the wedding, that if she did not sign the prenup, they could not get married. Because of surrounding circumstances (large disparity between incomes, the wife’s lack of connection to any friends of family in Australia) Ms Thorne felt compelled to sign a grossly unfair prenup.[14] The courts would not enforce the agreement due to these circumstances.
  • Fraud: Here, fraud refers to dishonesty regarding a ‘material matter’ – for example, attempts to hide assets. [15]

Careful drafting in consideration of all your & your spouse’s personal circumstances will give the best chance of ensuring enforceability of the agreement if the relationship were to end. Pearce Webster Dugdales’ team of experienced and accredited lawyers are available to assist in drafting prenuptial and binding financial agreements today.

[1] Family Law Act 1975 (Cth), s 90B.
[2] Family Law Act 1975 (Cth), s 90B(2)(b)(i).
[3] Family Law Act 1975 (Cth), ss 90C, 90D.
[4] Family Law Act 1975 (Cth), ss 90UB – 90UD.
[5] Family Law Act 1975 (Cth), ss 90G, 90UJ.
[6] See: MeBank, ‘75% of Aussies think prenups are fair, yet only 18% have one’ (Web Page, 2 September 2022) <https://www.mebank.com.au/news/only-18-percent-of-aussies-have-prenups/>
[7] Family Law Act 1975 (Cth), ss 90B – 90D,
[8] Family Law Act 1975 (Cth), s 90DA.
[9] Family Law Act 1975 (Cth), ss 90KA, 90UN.
[10] Family Law Act 1975 (Cth), s 90G.
[11] Family Law Act 1975 (Cth), s 90E.
[12] Family Law Act 1975 (Cth), ss 90K (1)(d), 90UM(1)(g).
[13] Family Law Act 1975 (Cth), ss 90K(1)(e), 90UM(1)(h).
[14] Thorne v Kennedy [2017] HCA 49.
[15] Family Law Act 1975 (Cth), s 90K(1)(a); Hoult v Hoult and Others (2011) 48 Fam LR 475.