Author: Gabby McDonald – Client Care Manager, and Carol Pages – Principal, Pages Family Law.
If you’ve started looking into protecting your assets before, during or after your relationship, you’ve probably come across terms like prenup, postnup and Binding Financial Agreement (BFA).
Many people think they’re all different documents however in Australia, a BFA covers pre-nups as well as post-nups, sometimes called mid-nups. You don’t need to be married, or plan to be married to have a BFA. You can have a BFA if you are in a de facto relationship.
What Is a Pre-nup?
If you’re planning to move in together or get married and want to protect your assets before your relationship begins or progresses, you’ll usually be looking at a pre-nup (Pre-nuptial Agreement).
Even if you don’t plan to be married, you can enter into a BFA either prior to, or when you are living with your partner.
In all of these cases, your BFA sets out how you and your partner agree your property, finances and debts will be divided if your relationship ends in the future.
What Is a Post-nup?
If you’re already married or in a de facto relationship, but you’d like to put financial arrangements in place now, you’ll generally need what’s known as a mid-nup or a post-nup.
Like a prenup, BFAs agreed to during your relationship record how assets, liabilities and financial matters will be dealt with if your relationship ends in the future.
These BFAs can be popular during your relationship for different reasons such as one party receiving a large inheritance, changes to your relationship, or wanting certainty about what would happen in your financial matters if your relationship did break down. For more information about mid-nups and BFAs during your relationship please refer to our earlier article: What is a Mid-Nup and How Do You Know If It’s Right for You?
Post separation
If you have separated, you can formalise your financial settlement in a BFA.
A BFA is one of two ways to document your post separation property settlement, whether you were married or in a de-facto relationship.
The best document for your situation will depend on your situation and include considerations such as whether parenting matters are involved, if spousal maintenance is relevant to your situation and the requirement for both parties to receive written independent legal advice.
To help decide whether a BFA is the right agreement for you to formalise your property settlement after separation, please refer to our earlier article: Family law property division – Documenting your agreement
What Is a Binding Financial Agreement (BFA)?
A Binding Financial Agreement (BFA) is the official legal name used under Australian family law for all of the above situations.
A BFA can be entered into:
- ● Before a marriage or de facto relationship (Pre-nup)
- ● During a marriage or de facto relationship (mid-nup or post-nup)
- ● After separation.
Why Do People Get a BFA?
Every relationship is different, but people often consider a BFA when they want to:
- ● Protect assets they owned before the relationship
- ● Safeguard an inheritance or family wealth
- ● Protect a business
- ● Preserve assets for children from a previous relationship
- ● Provide certainty about financial arrangements
- ● Avoid lengthy disputes if the relationship ends
- ● Clarify financial expectations from the beginning.
A BFA isn’t about expecting a relationship to fail. Many couples see it as sensible financial planning, similar to making a Will. You hope you’ll never need it, but it’s there if circumstances change.
The Right Agreement at the Right Time
The biggest source of confusion is the terminology.
A pre-nup and a post-nup aren’t different legal documents in Australia, they’re simply common names for a Binding Financial Agreement made at different stages of a relationship.
The stage of your relationship determines which type of agreement is available to you, and because these agreements must meet strict legal requirements, they require careful preparation and independent legal advice.
If you’re considering a Binding Financial Agreement, obtaining advice early can help you understand your options, protect your financial future and choose the approach that’s right for your circumstances.
