Planning for your financial future as a couple is an important step toward protecting your assets and providing clarity in your relationship. A binding financial agreement (BFA) offers a practical way to document how property and financial matters will be handled. Eliza Legal regularly assists Victorian couples with creating legally enforceable agreements that stand up to scrutiny.

Understanding what makes these agreements valid isn’t just a legal technicality – it’s the difference between having genuine financial protection and holding a worthless piece of paper.

What this article covers

This article provides a comprehensive overview of binding financial agreements in Victoria, explaining why validity matters for enforceability and how it affects future property outcomes.

Who should read this

This information is valuable for couples planning marriage, those already married, separated couples, and de facto partners in Victoria who want to establish clear financial arrangements.

Key Takeaways

  • A valid BFA requires written documentation, signatures from both parties, independent legal advice, full financial disclosure, and voluntary consent.
  • Each party must receive independent legal advice from separate lawyers who provide signed certificates.
  • Full disclosure of all assets, liabilities and financial resources is mandatory – hiding information can invalidate the agreement.
  • Common grounds for challenging BFAs include fraud, duress, and improper legal processes.
  • Regular reviews of your BFA are recommended following major life changes.

What is a binding financial agreement?

Definition and purpose

A binding financial agreement is a private legal contract between parties in a relationship (or former relationship) that sets out how property and financial matters will be handled. These agreements allow couples to decide their financial arrangements rather than having a court make these decisions.

Types of agreements commonly used in Victoria

In Victoria, you can create a BFA at different relationship stages:

  • Pre-relationship agreements (before marriage or starting a de facto relationship)
  • During-relationship agreements (while married or in a de facto relationship)
  • Post-separation agreements (after a relationship has ended)

How a BFA interacts with the Family Law Act and court orders

When properly executed, a BFA can replace the need for court-determined property settlements. The Family Law Act recognises these agreements as an alternative to judicial determination, giving couples more control over their financial futures.

Core formal requirements for validity

Must be in writing

A valid BFA must be in writing and typically includes identification of the parties, a recital of the relationship context, specific terms about property division, signatures, and dating of the document.

Signed by both parties

Both parties must sign the agreement. While witnesses aren’t specifically required by the Family Law Act for the signatures, having witnesses can provide additional verification if questions arise later.

“The foundation of a valid binding financial agreement is thorough documentation, genuine consent, and proper legal advice for both parties.” – Eliza Legal

Each party must receive independent legal advice about the agreement. The lawyers must provide a certificate confirming they’ve explained:

– The effect of the agreement on the rights of that party

– The advantages and disadvantages of making the agreement

Full and frank disclosure

Both parties must provide complete information about their financial situation, including assets, liabilities, income, superannuation, trusts, and potential inheritances. Hiding assets is a common reason BFAs get invalidated.

Capacity and voluntariness

Both parties must have the mental capacity to understand the agreement and must enter into it voluntarily, without duress, coercion, or undue influence.

Compliance with statutory formalities

The agreement must comply with all requirements under the Family Law Act, including proper filing of lawyer certificates and adherence to other procedural requirements that affect enforceability.

Topics a lawyer should cover with their client

A lawyer advising on a BFA should explain:

– How the agreement affects the client’s legal rights

– The advantages and disadvantages of entering the agreement

– Whether the terms are fair and reasonable

– The practical consequences of signing

The lawyer’s certificate

Each lawyer must provide a signed statement confirming they’ve provided independent legal advice to their client. This certificate forms part of the agreement and is essential for validity.

Timing and conflict checks

Legal advice must be provided before the agreement is signed. The lawyers representing each party must be completely independent of each other, with no conflicts of interest.

Disclosure: what to disclose and supporting evidence

Typical items to list and document

A comprehensive disclosure should include:

– Real estate and property

– Bank accounts and cash

– Investments and shares

– Superannuation

– Business interests

– Trust entitlements

– Vehicles and personal property

– Debts and liabilities

How to assemble supporting documents

Keep copies of bank statements, property valuations, superannuation statements, tax returns, and business financial statements. These documents provide evidence of the financial position at the time of agreement.

Consequences of failing to disclose

Non-disclosure of material facts can lead to the agreement being set aside by a court. Honesty is not just ethical – it’s essential for creating a binding agreement.

Common grounds to challenge or set aside a BFA in Victoria

If either party didn’t receive proper legal advice or if the required certificates aren’t included, the agreement may be invalid.

Fraud, misrepresentation or non-disclosure of material facts

Hiding assets or providing false information can invalidate an agreement.

Duress, undue influence, unconscionable conduct or lack of capacity

An agreement signed under pressure or when someone lacks capacity to understand it can be set aside.

If either party made a serious mistake or was misled about an important fact, the agreement might not be binding.

Practical steps to create a valid BFA

Pre-agreement checklist

Before drafting an agreement:

– Gather comprehensive financial records

– Decide on key outcomes you want

– Engage separate, qualified family lawyers

– Be prepared for full financial disclosure

Drafting tips

When creating the agreement:

– Use clear, plain language

– Identify assets precisely

– Include procedures for variations

– Address future property acquisitions

Execution and record-keeping

After drafting:

– Ensure both parties sign

– Obtain lawyer certificates

– Keep dated copies for both parties

– Store copies with your lawyers

Timing and updating

Review your BFA after major life events such as:

– Birth of children

– Significant inheritance

– Major asset purchases

– Substantial changes in financial circumstances

Common mistakes to avoid

Both parties must have separate lawyers. Sharing a lawyer or skipping legal advice altogether will invalidate the agreement.

One-size-fits-all templates rarely address the specific needs of your relationship and may not comply with Victorian legal requirements.

Poor or no financial disclosure

Full disclosure is mandatory. Attempting to hide assets can result in the entire agreement being thrown out.

Signing under pressure or without time to review

Agreements signed under pressure or without adequate time for consideration may be challenged on grounds of duress.

How a BFA affects court applications and property settlements

When a BFA prevents a court property settlement

A valid BFA will generally prevent either party from seeking a court-ordered property settlement covered by the terms of the agreement.

Interaction with family violence, child support and superannuation splitting rules

BFAs cannot override certain legal obligations, particularly regarding child support. Special rules apply to superannuation splitting, and the presence of family violence may affect validity.

Variation and setting aside options

BFAs can be varied by mutual agreement following the same formal requirements as the original agreement. Courts can set aside agreements in specific circumstances.

Where to get help in Victoria

Private family law solicitors and specialist firms

Specialist family lawyers with experience in financial agreements offer the most reliable guidance for creating valid BFAs.

Those with limited financial resources may find assistance through community legal centres or Legal Aid Victoria.

Court registry resources and authoritative guidance

The Family Court and Federal Circuit Court websites provide information about BFAs, though this should complement rather than replace professional legal advice.

Frequently asked questions (FAQ)

Can I make a BFA without a lawyer?

No. Independent legal advice for both parties is a mandatory requirement for a valid BFA in Australia.

Do BFAs cover superannuation and inheritances?

Yes, BFAs can address how superannuation and future inheritances will be treated, but specific legal requirements must be followed, particularly for superannuation.

How long does it take to set up a BFA?

The process typically takes several weeks to allow for full disclosure, proper legal advice, negotiation of terms, and completion of all formalities.

What if my partner refuses to disclose assets?

Refusing to disclose assets raises a red flag. A BFA without full disclosure is vulnerable to being set aside. Both parties should be transparent for the agreement to be valid.

Conclusion

Key takeaways

Creating a valid binding financial agreement requires attention to detail and proper legal process. The validity checklist includes written documentation, signatures from both parties, independent legal advice with certificates, full financial disclosure, and voluntary consent.

Next steps

If you’re considering a binding financial agreement, start by gathering detailed financial records and seeking specialist family law advice. Eliza Legal provides expert guidance on creating valid binding financial agreements that provide genuine protection and peace of mind for Victorian couples.