A binding financial agreement (BFA) can help farmers and rural property owners decide in advance how farm land, livestock, machinery and water rights are divided if a marriage or de facto relationship ends.
Made under the Family Law Act 1975, a properly prepared BFA can keep a family farm out of court and lower the risk of a forced sale, but it only works if it meets strict legal rules.
For many farming families, the land is far more than an asset on a balance sheet; it is a livelihood and a legacy built up over generations.
Knowing how a BFA works and where it can fall apart is often the difference between protecting that legacy and watching it get split in two.
How Does a Binding Financial Agreement Protect a Family Farm?
A BFA protects a family farm by setting out, in writing and ahead of time, who keeps the farm and how its value is treated if the relationship breaks down.
Because the agreement is made under the Family Law Act 1975, a valid BFA can remove the farm from the pool of assets a court would otherwise divide.
A couple can sign a BFA before they marry, during the marriage, or after separation, and de facto couples can do the same under their own part of the same Act.
The key benefit for farmers is certainty.
Instead of leaving the future of the property to a judge applying a four-step process, the couple agrees on the outcome themselves while the relationship is healthy.
When the agreement is binding, it ousts the court’s power to make property orders between the parties for the matters it covers, which is why so many rural families use one to ring-fence the farm.
Even so, a court can still become involved if one party asks for the agreement to be enforced or seeks to have it set aside.
Can a BFA Keep a Farm in the Family for the Next Generation?
Yes, a BFA can help keep a farm within the family by quarantining pre-owned rural property and future inheritances from division.
Many Australian farms are handed down through families, and a parent may gift or sell land to a son or daughter as part of a succession plan.
Without an agreement, that gifted land can still be drawn into a property settlement, where contributions made by both partners over the years are weighed up.
A BFA lets the couple agree that the farm, or a defined share of it, stays with the partner whose family it came from.
This gives older generations confidence that the property they spent a lifetime building will not leave the bloodline if a relationship later ends.
Does a BFA Cover Farm Land, Livestock, Machinery and Water Rights?
A BFA can cover the full range of farm assets, including land, livestock, plant and machinery, water entitlements, and the farming business itself.
Water rights in particular can be worth a large sum on their own, so spelling out who holds them avoids a costly fight later.
For the agreement to stand, both partners must give full and frank disclosure of everything they own, owe, and earn.
That means listing the real value of the land, the herd, the equipment, any leases, and any debt secured against the property.
Leaving an asset out, or guessing at its value, is one of the quickest ways to leave a BFA open to challenge down the track.
What Happens When a Farm Is Held in a Trust or Company?
When a farm is held through a family trust or a company, a BFA can deal with each partner’s interest in those structures, but it cannot rewrite the trust or bind the entity itself.
Plenty of rural enterprises are run through a discretionary trust or a company for tax and succession reasons, which makes ownership less straightforward than a name on a title.
A court can look behind these structures to work out who really controls the assets, so the agreement needs to be drafted with that in mind.
Careful wording can record who controls the trust, who benefits from it, and how that interest is treated on separation.
This is an area where general templates tend to fail, because they rarely account for how rural businesses are actually structured.
Why Do Farmers Face Special Risks in a Property Settlement?
Farmers face unusual risks because farm wealth is usually locked up in assets that are hard to sell quickly, so splitting it often means selling the very thing that earns the family’s income.
Family law makes no special exemption for farms, and the same four-step approach to dividing property applies to farming families as it does to everyone else.
This affects a huge number of households, because more than 99% of Australian agricultural businesses are wholly Australian owned, and the majority are family owned and run.
A city couple might divide a house, some savings, and superannuation, while a farming couple may have most of their wealth tied to a single block of land they both live and work on.
The table below compares what tends to happen to a family farm under a BFA against a court-decided property settlement.
| Feature | Family farm with a BFA | Family farm decided by a court |
| Who decides the outcome | The couple, agreed in advance | A judge applying the Family Law Act |
| Risk of a forced sale | Lower, as the split is pre-agreed | Higher, if no other way to divide value |
| Certainty for succession | High, terms are set out clearly | Uncertain until orders are made |
| Time and cost | Mostly upfront and predictable | Can run for months or years |
| Privacy | Kept between the parties | Heard in the court system |
| Can it be challenged | Yes, on limited legal grounds | Final orders are hard to reopen |
A BFA shifts the big decisions to a calmer time, when both partners can think clearly about the farm’s future rather than fighting over it after a breakup.
That said, the table also shows the trade-off, because a BFA can be set aside on certain grounds, which is exactly why how it is prepared matters so much.
Could a Court Order a Farm to Be Sold After Separation?
Yes, where there is no agreement and the couple cannot settle, a court can order a farm or part of it to be sold to reach a just and equitable division.
This is the outcome most farming families fear, because selling the land can wipe out the business and the home in one stroke.
A court will try to find practical solutions first, such as one partner buying out the other or refinancing, but those options depend on being able to raise the cash.
When the farm carries debt or has limited income, a buy-out may simply not be possible, which is when a sale becomes the only way to share the value.
A clear BFA made in good time can greatly reduce this risk, though it cannot remove it completely, since any agreement can still be challenged or set aside.
What Should Farmers Consider Before Signing a BFA?
Before signing, farmers should focus on three things: getting their own independent legal advice, disclosing every asset honestly, and leaving enough time so no one feels pushed into it.
Each of these points is not just good practice; it goes directly to whether the agreement will hold up if it is ever tested.
A farm BFA that ticks the legal boxes but ignores these basics can look strong on paper and still collapse when it matters most.
Why Is Independent Legal Advice So Important for a Farm BFA?
Independent legal advice is a strict legal requirement and the single biggest factor in whether a BFA survives a later challenge.
Under the Family Law Act, each partner must get advice from their own lawyer about how the agreement affects their rights before they sign.
The risk of skipping or rushing this step was made clear in Thorne v Kennedy [2017] HCA 49, where the High Court set aside both a pre-nuptial and a post-nuptial agreement.
In that case, the agreement was presented just days before the wedding, with the marriage said to be off unless it was signed, and the court found the weaker party had been subjected to unconscionable conduct and undue influence.
For a farming couple, the message is simple: both people need real, unhurried advice from separate lawyers, or the protection they thought they had may not exist.
How Have the 2025 Family Law Changes Affected Farm BFAs?
The Family Law Amendment Act 2024, which commenced on 10 June 2025, reshaped how property is divided and lifted the bar on financial disclosure.
It codified the property settlement framework that courts had developed through case law, setting out the factors and steps a court must consider, and the Attorney-General’s Department notes that family law courts can approach these steps in any order to reach a just and equitable outcome.
It also made the duty to disclose finances a clear legal obligation in the Act rather than only a court rule.
The changes also require courts to weigh the economic effect of family violence, including financial abuse, when dividing property.
The new statutory disclosure duty mainly applies to property and financial disputes after separation, but full and frank disclosure has always been central to a valid BFA, and leaving assets out remains a ground to have one set aside.
Anyone who signed a farm agreement before these changes may want to have it reviewed to check it still does the job under the current law.
When Is the Best Time to Put a Farm BFA in Place?
The best time is well before a wedding or a major farm transfer, not in the final weeks when emotions and pressure are running high.
Signing early gives both partners room to read the agreement, get advice, ask questions and negotiate without a deadline hanging over them.
It also lines up neatly with succession planning, so the agreement can be put in place at the same time as a gift of land or a change in the business structure.
A farm BFA signed calmly, months ahead of any big event, is far harder to attack than one rushed through at the last minute.
Treating it as part of normal farm planning, rather than a sign of mistrust, often makes the conversation easier for everyone involved.
Get Help With a Farm or Rural Property BFA
A well-prepared BFA can give farming families the certainty they need to protect the land, the business and the next generation, but it has to be done properly to hold up.
As binding financial agreement lawyers for farmers and rural property owners, the team at my law firm can help you put a clear, fair agreement in place at a transparent, fixed fee. Contact my law firm today by calling 1300-529-888 to arrange a consultation.
Frequently Asked Questions
Can a binding financial agreement stop a farm being sold in a divorce?
A binding financial agreement can greatly lower the risk of a forced sale by setting out in advance who keeps the farm and how its value is shared. If the agreement is valid and binding under the Family Law Act 1975, it removes the farm from the assets a court would otherwise divide, helping keep the property intact.
Does a BFA need to list every farm asset?
Yes. A valid binding financial agreement relies on both partners giving full and frank disclosure of everything they own, owe, and earn. For farmers, this means listing land, livestock, machinery, water rights, leases, and any debt against the property, with realistic values. Leaving assets out or guessing at values is a common reason agreements are later challenged and set aside.
Can a farm held in a family trust be protected by a BFA?
A binding financial agreement can address each partner’s interest in a family trust or company that holds the farm, but it cannot rewrite the trust or bind the entity itself. Because courts can look behind these structures to find who really controls the assets, this kind of agreement needs careful, tailored drafting rather than a generic template.
Do de facto farming couples need a BFA?
De facto farming couples can enter a binding financial agreement under the Family Law Act 1975, except in Western Australia, where de facto agreements fall under the Family Court Act 1997. A BFA is often valuable for de facto partners because, after a qualifying period, they have similar property rights to married couples, which can place the farm at risk.
When should farmers sign a BFA?
Farmers should sign a binding financial agreement well before a wedding or a major farm transfer, not in the final weeks beforehand. Signing early gives both partners time to get separate legal advice and negotiate without pressure. Agreements rushed through close to a wedding are far easier to challenge, as the High Court showed in Thorne v Kennedy.