A Guide to Different Types of Binding Financial Agreements

different types of BFA

By cropped Clara Suki

· Read time: 4 minutes

There are three main types of BFAs (or Binding Financial Agreements), determined by when they are signed.

A Binding Financial Agreement (BFA) is essentially a contract that documents an individual’s financial obligations to another party in the event of a relationship breakdown. They can be incredibly useful and save you and your partner time and emotional stress if you decide to separate.

The type of BFA is determined by the relationship stage when they are drafted, as per the table below.

Type of BFAWhen it is made
Prenuptial agreementsMade before formally commencing a relationship
Cohabitation agreementsMade during the course of a relatiionship
Postnuptial agreementsMade after a relationship has ceased, in the context of a property settlement

What does a BFA cover? 

A BFA helps you and your partner decide how your property and assets will be split if you decide to separate. The aim of a BFA is to have a fair and equal division of property. It can also cover spousal maintenance.

There are many different factors you should consider when negotiating your BFA. For example, it is important to note the finances of both parties currently and the financial obligations that each individual has.

This information will also be useful in determining the future earning capacity of each party and whether one individual will need more financial support than another. 

A BFA can factor analysing the financial contributions each party brought to the relationship.

What are the different types of BFAs? 

There are three main types of BFAs: 

1 – Prenuptial agreements

A prenuptial agreement (aka a prenup) occurs when the agreement is made before the relationship or marriage commences. As stated above, it is recommended that a BFA be created at the earliest stage possible in the relationship to increase chances of getting a fair and happy outcome for both parties.

Prenuptial agreements are most commonly seen in relationships where one party has a much larger amount of assets than another.

Making the agreement before the relationship commences means that the individual with the larger financial contribution is able to protect and preserve their wealth as best they can. 

2 – Cohabitation agreements

A cohabitation agreement occurs when the agreement is made whilst the parties are living together, either as a married or de facto couple. 

3 – Postnuptial agreements 

A postnuptial agreement occurs when the agreement is made after the two individuals have separated, and is made to bring finality to a property settlement. In this context, the alternative to a BFA would be negotiated Consent Orders, or litigation through the Court.

When can I enter into a BFA? 

You and your partner can enter into a BFA at many different stages during the course of your relationship. For example, you may choose to enter into a BFA: 

  • Before deciding to enter into marriage or a de facto relationship 
  • In the course of the relationship 
  • Whilst the individuals are in the course of separating 
  • After a divorce or relationship breakdown 

Despite being able to enter into a BFA during many different stages of the relationship, it is recommended that you and your partner negotiate your BFA during the course of your relationship. Leaving a BFA to the last minute can add increased tension to the negotiation process and may hinder your ability to reach an agreement you desire. 

It is also important to note that creating a BFA requires both parties to have obtained their own independent legal advice (ILA). Your lawyer should notify you of any advantages and disadvantages that may arise from the BFA. This aims to help you fully understand what you are signing. This is especially important as BFAs are legally binding documents and are extremely difficult to change. 

Read our article here about having a BFA reviewed.

We have extensive experience with Binding Financial Agreements at all stages of relationships. If you need any assistance regarding a binding financial agreement, feel free to contact us

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