Sunset Clauses in Binding Financial Agreements

A sunset clause in a binding financial agreement is a term that stops the agreement, or part of it, from applying after a set date or a set event.

It is a drafting choice made by the parties, not something the Family Law Act 1975 creates on its own.

Common triggers include a wedding anniversary, the birth of a child, or a fixed number of years.

Most Australian couples never think about what their agreement will look like a decade after they sign it.

That gap is where the real risk sits, and it is why sunset clauses have become one of the most argued-about drafting decisions in family law.

What Is a Sunset Clause in a Binding Financial Agreement?

A sunset clause is a term written into a binding financial agreement that limits how long the agreement, or a particular protection inside it, stays on foot.

Once the sunset date or trigger event arrives, the protection stops applying from that point forward.

It does not wipe out what has already happened, so property already transferred and rights already accrued under the agreement generally stand, and section 90J(3) lets a court make orders adjusting the parties’ rights after an agreement has been ended.

The phrase comes from general contract drafting and is borrowed into family law.

There is no section of the Family Law Act 1975 that mentions the words “sunset clause”, so everything about how one works comes down to the wording the parties actually use.

In practice, a sunset clause is most often used to quarantine assets for a limited window rather than forever.

A person who brings a home, a business or an inheritance into a relationship might want that asset protected for the first five years, on the view that a short relationship should not entitle their partner to a share of it.

After five years, the couple’s finances have usually blended enough that a permanent quarantine starts to look unfair, and the clause lets that protection lapse.

How Does a Sunset Clause Work in Practice?

A sunset clause works best when it ties the operation of the agreement to a specific, objectively provable event, so there is no argument later about whether the trigger has happened.

The Family Law Act 1975 does not dictate what kind of trigger you must use, which means the quality of the wording is entirely down to whoever drafts it.

A clause that says “this agreement ceases to apply on the seventh anniversary of the date of marriage” is easy to prove.

A clause that says “this agreement ceases to apply once the parties are financially settled” is not, and it invites the exact dispute the agreement was meant to prevent.

The trigger can be time based or event based.

Time based triggers are fixed periods, such as five, seven or ten years from the date of the agreement or the date of the marriage.

Event based triggers are life milestones, with the birth of a first child being by far the most common because that is the point at which one partner often steps back from paid work and the financial balance of the relationship changes.

Some agreements use a stepped approach instead of a single cut-off.

Under a stepped agreement, the protected pool shrinks year by year, or the other partner’s entitlement grows by a set amount for each year the relationship lasts.

This is fairer on paper, but it is far more complex to draft and far more expensive to argue about if the relationship ends near a step boundary.

What Is the Difference Between a Sunset Clause and a Review Clause?

A sunset clause changes the legal effect of the agreement automatically when the trigger arrives, while a review clause only asks the parties to talk about it again.

That difference matters enormously, because a clause that simply requires the parties to review or renegotiate at some future point does not change the legal effect of the agreement at all.

A court may hold parties to a sufficiently clear obligation to meet and negotiate in good faith, but no court can force either of them to sign a replacement financial agreement on particular terms, and a partner who is happy with the existing document has every reason to refuse.

If you want the agreement to change over time, the change has to be built into the document itself rather than left to a future conversation.

The wording needs to spell out exactly what happens on the trigger date: which clauses stop applying, which clauses survive, and how any property already dealt with under the agreement is treated.

Without that detail, the parties can end up in the worst of both worlds, holding a document that is neither clearly on foot nor clearly finished.

How Does a Sunset Clause Fit With Section 90C of the Family Law Act?

Section 90C is the provision that lets a married couple make a financial agreement during their marriage, and a sunset clause is simply one of the terms that sits inside such an agreement.

Section 90C does not create sunset clauses or set rules for them.

It authorises the agreement itself, and the parties then decide how long that agreement should operate for.

The Family Law Act 1975 splits financial agreements by timing rather than by content.

Section 90B covers agreements made by people contemplating marriage, which is what most people mean when they say prenup.

Section 90C covers agreements made while the parties are married, which is the postnuptial category and the one most often used when a couple’s finances change during the relationship.

Because section 90C applies at any point while the parties are still married, it also covers agreements made after separation but before a divorce order.

Section 90D covers agreements made after a divorce order.

De facto couples have their own set of provisions in Part VIIIAB, with section 90UB for agreements before the relationship, section 90UC for agreements during it, and section 90UD for agreements after it breaks down.

A sunset clause can be written into any of these.

The section number changes, but the drafting principle does not.

Does Western Australia Follow the Same Rules?

Married couples in Western Australia use the Family Law Act 1975 like everyone else, but de facto couples in Western Australia do not.

Western Australia is the only state that has not referred its de facto financial powers to the Commonwealth, so Part VIIIAB of the Family Law Act 1975 does not reach de facto couples there.

A de facto couple in Western Australia makes a financial agreement under the Family Court Act 1997 (WA) instead, using section 205ZN before the relationship, section 205ZO during it, and section 205ZP after it ends.

Termination is dealt with by section 205ZU of that Act and setting aside by section 205ZV, and both closely follow the Commonwealth wording.

A sunset clause works the same way in practice, but the agreement has to be expressed to be made under the correct Western Australian provision, because an agreement pointed at the wrong Act is not a valid financial agreement at all.

Why Does Section 90J Matter for Sunset Clauses?

Section 90J of the Family Law Act 1975 says that parties can only end a financial agreement in two ways, and this creates a real technical problem for sunset clauses that is often overlooked.

The two permitted routes are including a termination provision in another financial agreement, or making a separate written termination agreement.

Section 90UL does the same job for de facto agreements under the Family Law Act 1975, as does section 205ZU of the Family Court Act 1997 (WA) for de facto couples in Western Australia.

There is no third route in the legislation for an agreement that simply switches itself off on a date.

This is why the drafting of a sunset clause has to be done with care.

A clause that says the whole agreement ends on a given date is trying to do something the Act reserves for termination agreements, and family lawyers who work in this area generally build a termination agreement into the document itself so that the ending is achieved by a route the Act recognises.

No appellate decision has settled exactly how far a self-executing expiry clause can go on its own, so this is the conservative approach rather than a point of decided law.

A termination agreement carries its own requirements under section 90J, including independent legal advice for each party and signed statements confirming that advice was given, which closely mirror the section 90G requirements for the financial agreement itself.

Both sets of requirements have to be satisfied, and the drafting has to make clear which advice covers what.

The safer alternative, and the one many practitioners prefer, is to draft the sunset clause so it limits the operation of particular protections rather than purporting to end the agreement outright.

Under that approach the agreement stays alive, but the quarantine over a specific asset falls away on the trigger date and the property that was protected is simply dealt with under the agreement’s ordinary terms.

This is a drafting distinction that most people would never spot on their own, and it is one of the main reasons template agreements bought online are so unreliable.

What Happens if Your Binding Financial Agreement Has No Sunset Clause?

A binding financial agreement with no sunset clause ordinarily keeps operating indefinitely, and the passing of time alone does nothing to weaken it.

It stays in force until the parties formally terminate it under section 90J or a court sets it aside under section 90K.

Nothing in the Family Law Act 1975 puts an expiry date on financial agreements, and there is no rule that an old agreement becomes weaker simply because it is old.

It can still be found void or unenforceable, and it only ever governs the financial matters it actually covers, but nothing happens to it just because years have gone by.

A binding agreement even survives the death of a party, because section 90H says it continues to operate and binds the legal personal representative of the person who has died.

That permanence is usually the point.

Someone who signs a prenup to protect a family farm or a business built before the relationship wants that protection to hold in twenty years, not five.

Section 71A supports this by keeping the court’s usual property powers under Part VIII away from the financial matters a binding agreement actually covers, which is what gives these documents their certainty.

That exclusion goes no further than the matters the agreement deals with, so anything left out of the document is still open to the court.

The difficulty is that permanence cuts both ways.

An agreement drafted for a couple in their late twenties with no children and modest assets may bear almost no relationship to their lives at fifty, with three children, a mortgage, a family business and very different superannuation balances.

The document does not adjust for any of that.

Can a Court Set Aside a BFA Just Because Circumstances Have Changed?

No, an Australian court cannot set aside a binding financial agreement simply because circumstances have changed or because the outcome now looks unfair.

Section 90K says a court may set an agreement aside “if, and only if” one of a closed list of grounds is made out, and general unfairness is not on that list.

The grounds include fraud or non-disclosure of a material matter, entering the agreement to defeat creditors, the agreement being void, voidable or unenforceable, it having become impracticable to carry out, unconscionable conduct in the making of the agreement, and certain superannuation problems.

There is a specific changed circumstances ground, but it is narrow.

Section 90K(1)(d) allows a court to intervene where a material change has occurred relating to the care, welfare and development of a child of the marriage, and where the child or a party with caring responsibility will suffer hardship if the agreement is not set aside.

Having a child is not enough on its own.

The applicant has to prove hardship that flows from the change, and the courts have set a demanding evidentiary standard for doing so.

In Fewster & Drake [2016] FamCAFC 214, a wife who had been pregnant with the couple’s first child when the agreement was signed persuaded a trial judge to set it aside, but the Full Court overturned that decision.

The Full Court held that the evidence did not permit a proper comparison between the financial position of the child and the wife under the agreement and their position if the agreement were set aside, and without that comparison the hardship ground could not be made out.

The 2020 Full Court appeal in Daily & Daily [2020] FamCAFC 304 makes the same point from a different angle.

That couple had signed a financial agreement in July 2005 that divided their assets unequally, and by the time they separated in September 2018 the husband’s superannuation had grown from around $67,669 to around $970,578.

The Full Court confirmed that section 90K(1)(d) requires a two-limb comparison between the position of the child or carer with the agreement in place and their position without it, and sent the case back for rehearing because the trial judge had not made the findings that comparison required.

What happened next is the part most articles leave out.

On the rehearing the agreement was held void for uncertainty, which meant it had never been binding at all, and the court found in the alternative that it would have been set aside under section 90K(1)(d) in any event.

The husband then sued the firm that had drafted it, and on 5 November 2025 the High Court held in R Lawyers v Mr Daily [2025] HCA 41 that the negligence claim had not become time-barred, because the cause of action did not accrue until at least separation, but that he could not prove any loss beyond the legal costs of fighting over the agreement.

Two lessons come out of these cases.

Changed circumstances alone will not rescue you from an agreement you no longer like, and the burden of proving hardship sits squarely on the party trying to escape the document.

The second is that how an agreement is drafted matters far more than how long it has been sitting in a drawer, because an agreement that is unclear on its face can fail no matter what has or has not changed.

What Are the Real Risks of an Agreement With No End Date?

The main risk of an agreement with no end date is that it will still be sitting there years later, drafted for a life neither party is living any more, and the courts will enforce it anyway.

Australian Bureau of Statistics figures for divorces granted in 2025 show a median duration from marriage to separation of 9.4 years, and a median of 13.4 years from marriage to divorce.

Those figures describe marriages that ended rather than marriages generally, but they still make the point.

Where an agreement is tested at all, it is usually many years after it was signed, by which time the assets it lists may have been sold, the businesses it protects may have been restructured, and the advice each party received may have been overtaken by law reform.

A second risk is that the agreement itself becomes unworkable.

If the agreement carefully divides a property that has since been sold, or a company that has been wound up, a party may need to argue the agreement has become impracticable under section 90K(1)(c), which is an uncertain and expensive path.

Agreements that identify assets by name rather than by category age particularly badly.

A third risk is that pressure to fix the problem later produces a challenge to the original document.

The High Court’s decision in Thorne v Kennedy [2017] HCA 49 set aside two agreements for undue influence and unconscionable conduct where the wife had been told the wedding would not go ahead unless she signed, and she signed the first agreement four days before the ceremony and a second, similar agreement shortly after it.

That case is a reminder that courts will look closely at how an agreement came to be made, and that a rushed attempt to replace an outdated agreement carries its own dangers.

The table below compares how the two approaches actually behave over time.

The key takeaway is that a sunset clause does not make an agreement safer in some general sense.

It shifts risk from one party to the other, and from one point in time to another, so the right choice depends entirely on which asset you are protecting and how long you realistically need that protection to last.

What Are the Advantages of Including a Sunset Clause?

The strongest advantage of a sunset clause is that it makes an agreement easier to defend as a fair bargain, which matters because the circumstances in which an agreement was made are exactly what a court examines under section 90K.

Fairness is not a ground for setting an agreement aside on its own.

But how one-sided the terms were, and whether they were open to negotiation at all, feed directly into whether there was undue influence or unconscionable conduct, which are grounds.

An agreement that plainly ends after a defined period is easier to present as a considered bargain between two adults than one that quarantines a partner’s assets forever regardless of what the other person gives up.

Does a Sunset Clause Make an Agreement Easier to Negotiate?

Yes, a sunset clause often makes the conversation with your partner much easier, because it reframes the agreement as protection for a period rather than a permanent statement about the relationship.

Many people are willing to accept a document that protects a partner’s pre-relationship home for the first several years, and far less willing to accept one that locks them out of that home forever.

Presenting the agreement as time limited removes a lot of the emotional weight from the discussion.

That has a legal benefit as well as a practical one.

Agreements signed reluctantly, under pressure, or at the last minute before a wedding are the ones that end up being challenged, and anything that makes the negotiation calmer and slower improves the document’s prospects of surviving.

A partner who genuinely accepts the terms is a partner far less likely to attack them later.

Does a Sunset Clause Reflect How Relationships Actually Change?

A sunset clause reflects the way the weight of an initial contribution tends to change as a relationship lengthens, which is something Australian courts look at closely when they divide property.

In a two-year relationship, the person who brought in a fully paid house has clearly made the dominant contribution.

In a twenty-year relationship with children, career sacrifices and shared debt, that initial contribution is only one part of a much larger picture.

There is no rule that contributions become equal after a set number of years, and a court weighs financial contributions, non-financial contributions, homemaking and parenting together before turning to each party’s current and future circumstances.

The Family Law Amendment Act 2024, which took effect on 10 June 2025, reinforced this by writing the court’s approach to property into the legislation and expressly requiring the effect of family violence on contributions to be considered.

Those reforms changed how courts decide property cases, but they did not change the rules for financial agreements in Part VIIIA.

An agreement with a sensible sunset clause tends to sit more comfortably alongside the outcome a court would reach anyway, which can make it less tempting to challenge in the first place.

What Are the Disadvantages of a Sunset Clause?

The biggest disadvantage of a sunset clause is that it removes your protection at the point where the money involved is usually largest.

If your agreement expires after five years and you separate in year eleven, whatever protection it gave has already fallen away, and only the parts drafted to survive the sunset date will still help you.

Given that marriages ending in divorce in 2025 ran a median of 9.4 years to separation, a short sunset period means the agreement will often have lapsed before it is ever needed.

Do You Lose Certainty When the Sunset Date Passes?

Yes, once the sunset date passes you lose the certainty the agreement was bought for, at least in relation to whatever the clause switched off.

Property is then dealt with the same way it would be for a couple who never signed anything, which usually means negotiating a settlement, applying for consent orders, or making a fresh agreement.

If none of that works, the court’s ordinary powers under section 79 become available, and each party can argue about contributions, future needs, superannuation and everything else the agreement was designed to take off the table.

The cost difference between a fixed fee agreement and a contested property case is very large.

There is also a psychological problem that lawyers see more often than clients expect.

A looming sunset date can put pressure on a relationship at precisely the wrong moment, with one partner conscious that the protection is about to disappear and the other conscious that it is about to arrive.

Agreements that step down gradually reduce this cliff edge effect, but they are more complex and cost more to prepare.

Does a Sunset Clause Add Cost and Complexity?

A sunset clause adds both cost and complexity, because ending a financial agreement properly is a formal process under the Family Law Act 1975 rather than a matter of letting a date pass.

Section 90J only recognises two ways of ending an agreement, so a well drafted sunset clause usually needs additional wording, and often a built-in termination agreement with its own independent legal advice for each party.

That means more drafting time, more advice, and more signed statements than a straightforward agreement requires.

The other cost is the one that arrives later.

Couples who use a sunset clause and still want protection afterwards will need a fresh agreement once the first one lapses, which means a second round of advice and a second set of fees.

That is not necessarily a bad outcome, because the second agreement will reflect the finances they actually have, but it should be budgeted for at the start rather than treated as a surprise.

When Should You Include a Sunset Clause in a BFA?

A sunset clause makes most sense when the asset you are protecting is one whose importance genuinely fades as the relationship lengthens.

Savings, a car, a deposit, a modest apartment or a share portfolio built before the relationship all fall into this category, because after ten or fifteen years together those assets have usually been absorbed into a shared financial life.

A sunset clause is also worth serious thought where the agreement is being signed close to a wedding, where one party has far more bargaining power, or where the relationship is new and the parties want protection during the early, less certain years.

Situations where a sunset clause is commonly recommended include:

• Short quarantines of pre-relationship savings, deposits or a first home
• Couples marrying young where future contributions are likely to even out
• Age-gap relationships where one party’s asset base is temporarily much larger
• Agreements signed under time pressure, where a limited term makes the bargain easier to defend
• Second relationships where the protection is only needed until children from a previous relationship are financially independent

When Is a Sunset Clause Usually Not Needed?

A sunset clause is usually not appropriate where the asset being protected belongs to a wider group of people or is meant to pass through generations.

Farms, family companies, trust interests and inherited wealth are the clearest examples, because the reason for protecting them does not weaken with time and other family members are relying on that protection remaining in place.

Letting an agreement lapse in those cases can expose siblings, business partners or a family trust to a claim nobody anticipated.

Post-separation agreements are another category where a sunset clause makes little sense.

An agreement made under section 90D or section 90UD is meant to draw a final line under a finished relationship, and building an expiry date into it would defeat the whole purpose.

The same applies to agreements dealing with superannuation splits or one-off transfers, where the agreement is performed once and then has nothing left to do.

How Do You Keep a Long-Running Agreement Current Without a Sunset Clause?

The practical alternative to a sunset clause is a scheduled review, where the parties agree between themselves to revisit the agreement at set intervals without writing an enforceable expiry into the document.

This keeps the protection permanent while still giving both parties a regular chance to replace the agreement if it no longer fits.

A five-yearly review is common, as is a review triggered by a major life event such as the birth of a child, a business sale or a significant inheritance.

If a review shows the agreement needs to change, the parties make a new financial agreement that terminates the old one, which is one of the two routes section 90J allows.

That new agreement needs the same formalities as the original, including independent legal advice for each party and signed statements confirming that advice was given.

Handled this way, a couple gets the flexibility of a sunset clause without ever having a period where they are unprotected.

Get Help With Sunset Clauses in Your Binding Financial Agreement

A sunset clause can be a sensible way to keep a binding financial agreement fair as your life changes, but it has to be drafted so it actually works under the Family Law Act 1975, and it is not the right answer for every asset or every couple.

As binding financial agreement lawyers working with couples across Australia, my law firm can advise you on whether a sunset clause suits your situation and prepare an agreement that holds up, all at a fixed fee agreed before any work starts.

Call 1300-529-888 to talk it through.

Frequently Asked Questions

Is a sunset clause in a BFA legally binding in Australia?

A sunset clause can be legally effective, but only if it is drafted to work within the Family Law Act 1975. Section 90J allows a financial agreement to be ended only by a new financial agreement or a written termination agreement, so a clause that simply switches the agreement off needs supporting wording and independent legal advice for both parties.

What happens to a BFA when the sunset date passes?

The protections it covers stop applying from that date, though transfers already made and rights already accrued generally stand. If the couple separates afterwards they can still settle privately, obtain consent orders or make a new agreement, and only if they cannot agree does the court decide the property under section 79.

Can a court cancel a BFA that has no sunset clause?

Only on the grounds listed in section 90K, which include fraud, non-disclosure, unconscionable conduct, the agreement being impracticable to carry out, and a material change relating to a child that causes hardship. Changed circumstances or an outcome that now feels unfair are not grounds on their own, as the Full Court confirmed in Fewster & Drake.

How long should a sunset clause in a prenup last?

There is no set period, and the right length depends on the asset protected. Because marriages ending in divorce in 2025 ran a median of 9.4 years to separation, a five-year sunset will often expire before it is needed. Many couples choose seven to ten years, or tie the clause to the birth of a first child.

Do de facto couples’ financial agreements use sunset clauses?

Yes, the same drafting approach applies. De facto agreements are made under sections 90UB, 90UC or 90UD of the Family Law Act 1975 rather than sections 90B, 90C or 90D, with the setting-aside grounds in section 90UM. Western Australia is the exception, where de facto couples use sections 205ZN, 205ZO and 205ZP of the Family Court Act 1997 (WA).

Does a sunset clause make a BFA harder to challenge?

It can help, but it is not decisive. Compliance with section 90G, full disclosure, proper independent advice and calm bargaining conditions all matter more directly. A time-limited agreement is easier to defend as a fair bargain, which can bear on undue influence or unconscionable conduct, but a sunset clause does not by itself make an agreement legally harder to challenge.