If you have started researching financial protection before marriage or a de facto relationship, you have likely encountered both the term "prenup" and "binding financial agreement." They are frequently used as synonyms, and in everyday conversation that is mostly fine. But when it comes to the law, there are meaningful distinctions that can affect how an agreement is structured, when it can be made, and whether it will hold up in court.
What is a prenup?
"Prenup" is shorthand for a prenuptial agreement. In common usage, it refers to a financial arrangement made before a marriage or de facto relationship begins. The term is borrowed largely from American legal culture and does not appear in Australian legislation at all. In Australia, there is no such thing as a "prenup" in a strict legal sense. What people mean when they say prenup is, in practice, a binding financial agreement made before the relationship is formalised.
So when someone asks how to get a prenup in Australia, the answer always leads back to the same legal instrument: a binding financial agreement under the Family Law Act 1975 (Cth).
What is a binding financial agreement?
A binding financial agreement (BFA) is the formal legal mechanism created by the Family Law Act that allows couples to contract out of the standard property settlement and spousal maintenance provisions that would otherwise apply. The key feature of a BFA is that it can be entered into at several different stages of a relationship, not just before it begins.
Under Australian law, a BFA can be made:
- Before a marriage or de facto relationship (this is what most people call a prenup)
- During a marriage or de facto relationship
- After separation, as part of a broader financial settlement
- After divorce has been finalised
This flexibility is one of the most important things to understand. A BFA is not exclusively a pre-relationship document. It is a tool available at almost any point in a couple's legal journey. For a detailed look at how binding financial agreements work, the requirements and practical considerations are worth reviewing carefully before you begin the process.
So is a prenup simply a type of BFA?
Yes, that is the most accurate way to frame it. A prenup, in Australian law, is a binding financial agreement made before the relationship is legally recognised. All prenups are binding financial agreements, but not all binding financial agreements are prenups. The BFA is the broader category; a prenup is a subset of it defined by timing.
This distinction matters for a practical reason: people sometimes believe a BFA can only be created before they commit to a relationship. That misunderstanding can lead couples to assume they have missed the opportunity to protect their assets if they did not act before moving in together or getting married. In reality, a BFA remains available to them throughout the relationship and even after it ends.
What both documents have in common
Whether made before, during, or after a relationship, all BFAs share the same legal requirements under the Family Law Act. These include:
- The agreement must be in writing and signed by both parties.
- Each party must receive independent legal advice from a qualified Australian lawyer before signing.
- Each party's lawyer must provide a signed statement confirming that advice was given.
- The agreement must not have been made under duress, fraud, or undue influence.
Failing to meet any of these requirements can cause the agreement to be set aside by a court. The legal threshold is deliberately high because BFAs effectively remove access to the family law property settlement system. Understanding what makes a binding financial agreement enforceable is essential before either party signs.
When should you use each term?
In client consultations and general conversation, using "prenup" to describe a pre-relationship BFA is perfectly understandable. Lawyers and clients use it all the time. However, if you are drafting documents, giving instructions to a solicitor, or reading through a legal agreement, you should expect to see the term "binding financial agreement" throughout. That is what the law calls it, and the terminology in the document matters.
If someone hands you a document titled "Prenuptial Agreement," that is not technically valid Australian legal terminology. A properly drafted Australian agreement will reference the relevant provisions of the Family Law Act and will be structured as a BFA. Any document that does not comply with those requirements is unlikely to offer the protection the parties intended.
Practical implications of the distinction
Understanding that a BFA extends beyond the pre-relationship window opens up options that many people do not realise they have. A couple who never got around to signing a prenup before marrying can still enter into a BFA during the marriage to clarify how assets would be divided if the relationship were to end. Couples who have already separated but have not yet resolved financial matters formally can also use a BFA as part of that resolution process.
That said, the closer a BFA is made to the point of separation or divorce, the more scrutiny a court may apply if it is later challenged. Agreements made during conflict carry a higher risk of being set aside on grounds such as duress. Agreements made well before any breakdown are generally in a stronger position, which is one of the reasons acting early is usually advisable.
Getting the right advice
Whether you are thinking about a prenup before your wedding or considering a BFA mid-relationship, the process and the legal requirements are the same. Both parties need independent legal advice, the document needs to be properly drafted, and both parties need to sign with a full understanding of what they are agreeing to.
The terminology may seem like a minor detail, but it points to a broader principle: financial agreements in Australian family law are strictly governed documents, not informal handshakes. Getting the language and the process right from the start is the only way to ensure the agreement does what you intend it to do.