About the Author
Charuna Chetty
Published on February 12, 2025
When you’re in the honeymoon phase of a relationship, the last thing you want to think about is what happens if things don’t work out. But the reality is, life is unpredictable, and protecting your financial future before marriage isn’t about planning for the worst, it’s about being prepared.
That’s where binding financial agreements, also commonly referred to as prenuptial agreements, come in. These agreements help couples set clear financial expectations from the start, ensuring both parties understand what happens to property, assets, and financial support if the relationship breaks down.
Under Australian family law, these agreements can help protect valuable assets, family businesses, and financial interests, whether you’re entering a marriage or a de facto relationship. But for a financial agreement to be legally binding, there are some steps both parties need to take – which we will discuss in this guide put together by our Sydney family lawyers. We will also help you to understand the laws around asset protection before marriage, how to structure a legally enforceable agreement, and the common mistakes to avoid. Because while no one enters a relationship expecting it to end, knowing your financial interests are protected can offer peace of mind.
What is asset protection before marriage?
Asset protection before marriage ensures that if a relationship breaks down, your assets—such as property, savings, investments, or a family business—are divided fairly and according to an agreed plan rather than left to the courts.
One of the most effective ways to do this in Australia is through a binding financial agreement, often called a prenuptial agreement. This legally binding contract outlines how financial matters, including property division and spousal maintenance, will be handled if the relationship ends.
Without asset protection in place, the Family Law Act 1975 allows the family court to determine how assets should be split, considering financial and non-financial contributions (such as homemaking or childcare) if the couple cannot decide how to do so themselves. A financial agreement helps couples take control of their finances rather than leaving decisions up to the courts.
By putting proper protections in place, you can safeguard your financial interests and gain peace of mind, no matter what the future holds.
Laws and regulations around asset protection in Australia
Having a financial agreement is one thing—making sure it holds up in court is another. In Australia, binding financial agreements, including prenuptial agreements, are governed by the Family Law Act 1975, which sets out the legal requirements they must meet.
For a financial agreement to be legally binding, it must:
- Be in writing and signed by both parties.
- Clearly outline how assets and financial matters will be handled.
- Be entered into voluntarily, without coercion or undue pressure.
- Include full financial disclosure—hiding assets can result in the agreement being overturned.
- Be signed only after both parties receive independent legal advice from a qualified legal practitioner.
If these requirements aren’t met, the family court can set the agreement aside, leaving asset division to standard family law rules.
Financial agreements aren’t just for married couples—they also apply to de facto relationships. These agreements work in the same way as a prenuptial agreement, helping to protect assets and provide clarity if the relationship ends.
Given the potential for disputes, seeking independent legal advice is crucial to ensure your financial agreement is properly structured and enforceable.
Why asset protection before marriage is important
Discussing finances before marriage isn’t exactly romantic, but it’s one of the smartest things you can do. Without proper planning, a relationship breakdown can lead to complex financial disputes, which, as we mentioned above, could lead to the family court deciding how assets are split—regardless of whose name is on the title or who contributed more.
A binding financial agreement (or prenuptial agreement) provides clarity by outlining who retains what in the event of separation. This is especially important for those with valuable assets, a family business, or previous relationships, as it ensures financial commitments and existing obligations are protected.
Beyond protecting assets, these agreements offer emotional and financial security, allowing both parties to enter the marriage with confidence. It’s not about expecting the worst—it’s about ensuring you both have a clear financial plan for the future.
Steps to protect your assets before marriage
The most effective way to protect your assets before marriage is by creating a prenuptial agreement, also known as a binding financial agreement. This legally binding contract sets out how assets, property, and financial responsibilities will be handled if the relationship ends, preventing disputes and uncertainty.
Here’s how to ensure your financial agreement is valid and enforceable:
1. Discuss financial expectations early – Open and honest conversations about finances with your partner are essential. Understanding each other’s financial situation and goals helps create a fair agreement.
2. Engage a family lawyer – Each party must receive independent legal advice from a qualified legal practitioner to ensure the agreement is legally binding. This prevents claims of coercion or unfairness.
3. Draft a clear, comprehensive agreement – The agreement should specify how assets, debts, spousal maintenance, and property division will be handled. It must be written in clear terms to avoid ambiguity.
4. Provide full financial disclosure – Both parties must disclose all assets, liabilities, and financial interests. Hiding assets can result in the family court overturning the agreement.
5. Sign the agreement voluntarily – A binding financial agreement must be signed freely, without pressure or undue influence. Signing too close to a wedding could raise concerns about coercion.
6. Review and update the agreement if needed – Life circumstances change, so your financial agreement should be reviewed periodically, especially after major events like having children or acquiring significant assets.
While a prenuptial agreement is the most direct way to protect assets, other strategies—such as keeping certain assets separate, setting up trusts, or structuring a family business appropriately—can provide additional safeguards. You can discuss these options with our family lawyers at Unified Lawyers to ensure your asset protection plan suits your needs.
Can a financial agreement be overruled?
A binding financial agreement is meant to provide certainty, but under the Family Law Act 1975, the family court can set it aside in certain situations. If the agreement was created unfairly or doesn’t meet legal requirements, it may not be enforceable.
Some common reasons a financial agreement can be overruled include:
- Lack of independent legal advice – If either party did not receive independent legal advice before signing, the court may declare the agreement invalid.
- Failure to disclose assets – Full financial disclosure is required. If assets were hidden or undervalued, the agreement can be challenged.
- Undue influence or coercion – If one party was pressured into signing, such as right before the wedding, the agreement may not hold up in court.
- Significant changes in circumstances – If enforcing the agreement would cause undue hardship due to life changes, such as children or serious illness, the court may intervene.
- Unfair terms – If the agreement heavily favours one party or leaves the other without adequate resources, the court may set it aside.
To avoid these risks, a financial agreement must be properly structured, legally enforceable, and regularly reviewed. Seeking independent legal advice before signing ensures the agreement stands up to legal scrutiny.
Common mistakes to avoid in asset protection
While a financial agreement can protect you and your assets, it can also be easy to make mistakes when putting one together. To ensure you don’t have any issues with your agreement, here are some common mistakes and misunderstandings to avoid:
- Not getting independent legal advice – Both parties must receive independent legal advice before signing. Without it, the agreement may not be legally binding and could be set aside.
- Rushing into an agreement – Signing a prenuptial agreement under pressure, especially right before a wedding, can lead to claims of undue influence, making it unenforceable.
- Failing to disclose all assets – Full financial disclosure is required. Hiding or undervaluing assets can result in the agreement being challenged in court.
- Poorly drafted agreements – Vague wording or generic templates can create loopholes, making the agreement difficult to enforce.
- Not updating when circumstances change – Major life events like having children, receiving an inheritance, or financial shifts can affect an agreement’s validity. Updating it ensures it remains enforceable.
- Assuming financial agreements are only for married couples – Binding financial agreements also apply to de facto relationships, offering the same level of protection.
Ensuring a legally enforceable agreement requires proper legal guidance. Seeking independent legal advice from an experienced family lawyer can help avoid these mistakes and provide long-term financial security.
FAQs
Can a prenuptial agreement cover future assets?
Yes, a binding financial agreement can outline how future assets, such as investments, business profits, or inheritances, will be treated if the relationship ends. However, to ensure the agreement remains fair over time, it’s a good idea to review and update it as financial circumstances change.
Can a financial agreement include spousal maintenance?
Yes, a financial agreement can include provisions for spousal maintenance, specifying whether one party will provide financial support to the other if the relationship breaks down. However, if enforcing the agreement would cause significant financial hardship, the family court may step in and override this clause.
Can a prenuptial agreement be changed after marriage?
A financial agreement can be updated at any time, even after marriage. If circumstances change, the couple can sign a new legally binding agreement or amend the existing one. Both parties will need to receive independent legal advice before signing any updates to ensure the new terms are enforceable.
Does a financial agreement override the Family Law Act 1975?
A binding financial agreement allows couples to set their own financial arrangements rather than relying on the standard provisions of the Family Law Act 1975. However, if the agreement is unfair, lacks full financial disclosure, or was signed under pressure, the family court can set it aside.
What happens if one party refuses to sign a financial agreement?
A financial agreement must be entered into freely. If one party does not agree to the terms, they cannot be forced to sign. In this case, both parties will need to negotiate terms that they are comfortable with or consider alternative ways to protect their financial interests.
Do financial agreements apply to de facto relationships?
Yes, financial agreements are available to couples in a de facto relationship, not just those who are married. These agreements function in the same way as a prenuptial agreement, outlining how assets and finances will be handled if the relationship ends.
Can a financial agreement protect a family business?
Yes, a well-structured financial agreement can ensure that a family business remains protected in the event of a separation. This can prevent business assets from becoming part of the property pool and being divided by the court.
What if my financial agreement is outdated?
If a financial agreement no longer reflects your financial situation—whether due to a change in assets, marriage, or children—it’s important to update it. A new agreement can be signed to reflect the changes, ensuring it remains enforceable under Australian family law.
How Unified Lawyers Can Help
Sorting out finances before marriage might not be the most romantic task, but it’s one of the smartest moves you can make to protect your assets and avoid legal headaches down the track. Whether you’re getting married or in a de facto relationship, having a binding financial agreement in place can provide clarity, security, and peace of mind.
At Unified Lawyers, we understand that every relationship is different, and so are your financial circumstances. Our experienced family lawyers can guide you through the process, ensuring your financial agreement is legally binding, fair, and tailored to your needs. We take the time to explain your options, provide independent legal advice, and help you avoid common mistakes that could put your assets at risk.
If you’re considering a prenuptial agreement, need help reviewing an existing financial agreement, or want to discuss asset protection strategies, we’re here to help. Contact our team today to get started and ensure your financial future is in safe hands.
You can call us on 1300 667 461 or book a free consultation online using the button below.
Published on February 12, 2025
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