Binding Financial Agreements

Understanding the Importance of Binding Financial Agreements in the event of Divorce or Separation

According to the most recent data available from the Australian Bureau of Statistics (ABS), during 2023, there were 118,439 marriages registered, and 48,700 divorces granted in Australia. 


While these figures seem to disprove the saying “50% of marriages end in divorce”, based on the data from the ABS, it is still a very high number of divorces which are granted each year. 



For individuals facing the significant emotional stress and impact of divorce, going through an additional “property settlement” with an ex-spouse may seem overwhelming. 

What is a Property Settlement? How Does It Work?

If parties cannot reach an agreement as to the division of their assets and liabilities, they would be required to have a formal and final “property settlement” to be determined by the Family Court (Court). When doing so, the Court establishes and examines: 

  1. The value of the parties’ assets and liabilities at the time of hearing; 
  2. Assess the parties’ financial and non-financial contributions (this includes any contributions made towards the welfare of the family, including in the capacity as homemaker or parent); 
  3. Assess whether there should be an adjustment for those contribution considering the parties’ future needs; and 
  4. Whether in all the circumstances, it is just and equitable to make the order. 

Effect of Family Law Property Proceedings in Court

While every case is unique, it is not uncommon for parties to experience significant delays before the Court reaches a final decision on a property settlement. Often, parties will have incurred substantial legal fees in the process. Given that the Court has a broad discretion to make any property order which it considers appropriate, this often adds to anxiety and stress to those involved as no final outcome can be guaranteed. 



Based on the ABS data, with close to 100,000 people facing the emotional and financial stress of divorce each year, what can be done to better protect yourself in the event of separation or divorce? 

Ensure a Binding Financial Agreement is in Place

  • What is a Binding Financial Agreement?

    A binding financial agreement (agreement) is a legally enforceable and binding  agreement which enables parties to a marriage or a de facto relationship - and also those contemplating entering into marriage – to enter into an agreement in respect of their how their assets, financial resources will be divided in the event and circumstances of separation. These types of agreements are often referred to as a “pre-nup” which is an American short term used to refer to the equivalent of Binding Fianncial Agreements in Australia. These agreements can also be used as a cost efficient way of resolving a property settlement dispute after separation in the event the parties can reach an agreement without intervention from the Court. The agreements may also deal with whether spousal maintenance will be paid by one party to another. 

  • Why are Binding Financial Agreements important?

    Provided the agreement complies with the requirements in the Family Law Act 1975 (Cth) (the Act), they not only bind the parties to the agreement, but they also bind the Courts. In practical effect, this means that the Court must uphold terms of the agreement. 

  • What are the advantages of entering into a Binding Financial Agreement?

    The main advantage of entering into an agreement is that they provide clarity and certainty about how parties’ property will be distributed in the event of a divorce or separation. The benefit of this is it may avoid significant legal fees and expenses that would otherwise be incurred if a property settlement was determined by the Court. By entering into an agreement, each party is aware of what they will each receive in a property settlement, and this can remove feelings of anxiety and stress around the uncertainty of legal proceedings. It can also save parties significantly in legal fees. 

  • What assets can be distributed in a binding financial agreement?

    The agreement can deal with the property or financial resources of the parties at the time either at the time when the agreement is made, and/or future property yet to be acquired.  “Property” has a very broad definition in the Act however most commonly includes real property, vehicles, shares, cash, furniture, jewellery and even family pets. A  “Financial resource” is not defined in the Family Law Act 1975 (Cth) but generally includes a resource which a person can utilise or has available to them in the future, such as a person’s  future inheritance or an interest in a Family Trust. 

  • What about my superannuation? Can it be included in a binding financial agreement?

    Yes, an agreement can also deal with superannuation and clear definition as to what will occur with yours and your spouses superannuation funds and how they will be distributed in circumstances of separation  included. 

If you or your partner would like to gain a better understanding of how a binding financial agreement can help secure your financial future, or if you have recently separated from your partner and seek legal support and assistance in relation to property matters, we encourage you to get in touch with our Team on (03) 9787 4511, or alternatively, you can email us at reception@lardners.au. 

*Disclaimer - The content on this page is provided for information purposes only and it does not constitute legal advice. The content is of a general nature, and it may not be current. Formal legal advice should be sought in particular matters.