Legal Guide

Binding Financial Agreements: Do we need them?

A binding financial agreement (‘BFA’), commonly referred to as a pre-up, is an agreement that can be entered into at the commencement of a relationship, at any time throughout a relationship or at the end of a relationship. A BFA enables parties to reach an agreement, most commonly prior to a relationship ending, about how specific assets and liabilities are to be divided if the relationship breaks down.

Their most common use is to identify assets that respective parties came into the relationship with and protecting the interests of that party.


  • A BFA often provides comfort for parties who have previously been through a messy separation or those who come into a relationship with a superior financial position and wish to protect themselves.
  • A BFA often makes settlement negotiations at the end of a relationship quicker and more cost-effective because it details the respective parties’ financial positions and their contributions. It provides a clear guide as to what the parties intended to do with assets and liabilities if the separation was to occur.


  • A BFA is not a legally enforceable document. It is used as a guide throughout the separation process to highlight the party’s intentions for property distribution, however, it may not be adopted by the court in its entirety. It is one consideration among many that the court takes into account.
  • The law surrounding BFAs is relatively unsettled, particularly in relation to whether a court will overturn the agreement. For example, significant power imbalances could indicate that a party was forced to sign the agreement and therefore the court may not rely on it during settlement proceedings because of potential duress.

Should I get a BFA?

At Madsen Law, we recommend BFAs due to their ability to reduce protracted conflict if separation were to occur. We are confident that we can provide you with the best protection required regardless of your situation.

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