A prenup (known formally in Australia as a Binding Financial Agreement, or BFA) is often described as a way to protect everything you own before you marry or move in with a partner. That description is partly right, but it paints an incomplete picture. Understanding what a prenup can and cannot do is essential before you decide whether one is worth pursuing. Getting that wrong can mean relying on an agreement that was never as broad as you thought, or worse, one that a court will not honour at all.
What a prenup can do
Under the Family Law Act 1975 (Cth), a BFA allows couples to contract out of the property settlement regime that would otherwise apply if their relationship broke down. In practical terms, this gives couples significant control over their financial futures. Here is what a well-drafted agreement can achieve.
Protect pre-existing assets
One of the most common reasons people seek a prenup is to ring-fence what they brought into the relationship. A property you owned before the marriage, a share portfolio, an inheritance, or savings built up over years can all be specified in the agreement as belonging solely to one party. If the relationship ends, those assets are dealt with according to the terms you set, not by default property division rules. This is especially relevant where one partner enters the relationship with substantially more wealth than the other.
Shield a business from claims
Business owners face particular risks when a relationship breaks down. A BFA can be structured to exclude a business or business interests from the relationship pool, protecting employees, co-owners and clients from disruption. Our article on whether a prenup can protect a business in Australia explores this in more detail, including the conditions that need to be met for that protection to hold.
Specify how property will be divided
Rather than simply excluding assets, a BFA can set out a clear framework for how everything will be divided if the relationship ends. This might include the family home, investment properties, vehicles, superannuation, and other financial resources. Parties can agree on specific percentages, specific items, or a process for valuation and division. The flexibility is considerable, provided the agreement meets the legal requirements for enforceability.
Address financial support
A BFA can also deal with spousal maintenance. The parties can agree to limit, waive, or specify the circumstances under which one party will support the other financially after separation. This can provide certainty for both sides, particularly where one partner has paused a career to raise children or support the other's professional advancement.
Reduce conflict and legal costs later
Perhaps the least-celebrated but most practical benefit of a prenup is that it removes much of the uncertainty from a separation. When both parties already know how assets will be treated, there is less to fight about. That translates directly into lower legal costs, shorter timeframes, and less emotional damage if the relationship does end.
What a prenup cannot do
The limitations of a BFA are just as important as its scope, and they are often underappreciated. Assuming your agreement covers something it legally cannot can leave you exposed at exactly the moment you need protection.
It cannot override parenting arrangements
A prenup has no bearing on parenting orders or custody arrangements. Under Australian law, decisions about children are always made based on the best interests of the child at the time of separation, not on any prior agreement between the parents. If you have children, their living arrangements, schooling, and care will need to be resolved separately, either by agreement or through the court process.
It cannot waive child support obligations
Relatedly, neither party can contract out of their obligation to financially support their children. Child support is assessed by the Services Australia Child Support agency using a statutory formula, and a prenup cannot alter or extinguish that obligation regardless of what it says.
It cannot be enforced if the legal requirements are not met
This is one of the most critical limitations. A BFA is not enforceable simply because both parties signed it. Under the Family Law Act, each party must receive independent legal advice from a separate lawyer before signing. The lawyers must each sign a certificate confirming that advice was given. If these requirements are not satisfied, or if the agreement was entered under duress, unconscionable conduct, or material misrepresentation, a court can set it aside entirely. Our article on what makes a binding financial agreement enforceable explains these requirements in full.
It cannot account for every future circumstance
Life changes in ways that are hard to predict. A prenup written before children, career changes, major inheritances, or significant shifts in wealth may not adequately reflect the parties' circumstances by the time it is needed. Courts have discretion to set aside a BFA if enforcing it would be unjust given how circumstances have changed. This is why regular review and, where necessary, updating the agreement is important, not a one-time exercise.
It cannot be drafted loosely and still hold up
Vague language, ambiguous terms, and missing provisions are common reasons BFAs fail when tested. An agreement that says assets will be "divided fairly" without defining what that means gives a court very little to work with. Precision in drafting matters enormously. This is not the kind of document where a generic template serves the purpose.
Thinking about the bigger picture
A prenup is one piece of a broader financial planning conversation. For couples with significant shared or separate assets, it works best alongside a clear understanding of what counts as marital property in an Australian settlement, so that the agreement is drafted with full awareness of what is actually at stake.
The decision to enter a BFA is a serious one, and the quality of the advice you receive shapes how useful it ultimately is. A well-constructed agreement, entered into freely by both parties with proper legal advice, can offer genuine long-term certainty. A poorly drafted or legally defective one can leave both parties worse off than if they had never entered one at all. Speaking with an experienced family lawyer before committing to any agreement is always the right first step.