Yes, you can protect your assets without a traditional prenuptial agreement in Australia, but your options are more limited and carry greater risk than a formal legal agreement.
The most effective alternative is a binding financial agreement, which can be entered into before, during, or after a marriage or de facto relationship under the Family Law Act 1975.
Other strategies, such as keeping assets separate, maintaining detailed financial records, and using trust structures, can offer some level of protection, but none provide the certainty of a properly drafted BFA.
Without any formal agreement in place, Australian courts have broad powers under Section 79 of the Family Law Act 1975 to divide all assets in a way the court considers just and equitable, regardless of whose name those assets are in.
This article covers every available option for protecting your assets, explains what works and what does not, and outlines the real risks of relying on informal strategies alone.
What Happens to Your Assets Without a Formal Agreement in Australia?
Without a prenup or BFA in place, all of your assets become part of a shared pool that the court can divide if the relationship breaks down.
This includes assets you owned before the relationship, assets acquired during the relationship, and in many cases, assets held in trusts, companies, or superannuation funds.
The court follows a structured process under Section 79 of the Family Law Act 1975 when dividing property.
First, it identifies and values all assets, liabilities, and financial resources of both parties.
Second, it assesses each party’s contributions, both financial and non-financial, including homemaking and parenting roles.
Third, it considers the future needs of each party, taking into account factors such as age, health, income-earning capacity, and care of children.
Finally, the court determines whether the proposed division is just and equitable in all the circumstances.
This means that even if you purchased a property entirely with your own money before the relationship, and your name is the only one on the title, the court can still order that property to be transferred or its value shared with your former partner.
The length of the relationship plays a significant role in how much weight the court gives to pre-relationship contributions.
In longer relationships, the impact of assets brought in at the start tends to be diluted, meaning the division often moves closer to an even split.
In shorter relationships, pre-relationship contributions may carry more weight, but there is no guarantee the court will leave your assets untouched.
Does Keeping Assets in Your Name Alone Offer Protection?
Keeping assets in your own name does not prevent them from being included in a property settlement.
Australian family law does not recognise separate property in the same way that some other countries do.
Under the Family Law Act 1975, the court looks at all property of both parties, regardless of legal ownership.
If you own a home solely in your name but your partner has contributed to mortgage repayments, renovations, or household expenses, those contributions (both financial and non-financial) will be considered by the court.
Even if your partner has not contributed financially, contributions as a homemaker or parent are treated as valid contributions under the law.
The only scenario where keeping assets separate has some practical value is when the relationship is short and no significant intermingling of finances has occurred.
Even then, the court retains discretion to divide those assets if it considers it just and equitable to do so.
Can a Binding Financial Agreement Protect Your Assets Instead of a Prenup?
A binding financial agreement is the closest equivalent to a prenup under Australian law, and in practical terms, it is the same thing.
The term “prenup” is not used in Australian legislation.
Instead, the Family Law Act 1975 provides for BFAs under Sections 90B (before marriage), 90C (during marriage), and 90D (after divorce).
For de facto relationships, the equivalent sections are 90UB, 90UC, and 90UD.
A BFA sets out how assets, debts, and financial resources will be divided if the relationship ends.
It can also address spousal maintenance obligations.
Unlike a court order, a BFA is a private agreement between the parties, and it does not require court approval to take effect.
For a BFA to be legally binding, both parties must receive independent legal advice from separate lawyers.
Each lawyer must sign a certificate confirming that they provided advice about the effect of the agreement on their client’s rights and about the advantages and disadvantages of entering into it.
The agreement must be in writing and signed by both parties.
If these requirements are not met, the agreement may be unenforceable.
A properly drafted BFA provides a high level of certainty and control over how assets are divided.
It removes the uncertainty of the court process and allows both parties to agree on terms that reflect their individual circumstances.
This is particularly valuable for people who bring significant pre-existing assets, business interests, or family wealth into a relationship.
Can You Enter a BFA After You Are Already Married or Living Together?
Yes, you can enter into a BFA at any stage of a relationship.
Many people assume that a BFA can only be signed before a wedding, but this is not correct.
Under the Family Law Act 1975, couples can sign a BFA before marriage, during the marriage, or even after divorce.
De facto couples have the same options.
This means that even if you are already married or living with your partner, it is not too late to put a BFA in place.
A BFA signed during a relationship is sometimes referred to as a postnuptial agreement.
It functions in exactly the same way as a pre-marriage BFA, and it must meet the same legal requirements, including independent legal advice for both parties.
The key advantage of entering into a BFA at any stage is that it allows you to respond to changing circumstances.
For example, if one partner receives a large inheritance, starts a business, or acquires a significant asset during the relationship, a BFA can be created or updated to address how that asset will be treated if the relationship ends.
Do Trust Structures Protect Your Assets From a Property Settlement?
Trust structures are often discussed as a way to shield assets from property settlement claims, but their effectiveness is far more limited than many people believe.
The High Court of Australia addressed this issue directly in the landmark case of Kennon v Spry [2008] HCA 56.
In that case, Dr Ian Spry had placed significant assets into a discretionary family trust and attempted to restructure the trust to exclude his wife as a beneficiary when the marriage broke down.
The High Court ruled by majority that the trust assets could be treated as property available for division in the property settlement.
The court’s reasoning focused on the degree of control Dr Spry exercised over the trust.
Because he was the sole trustee with the power to distribute the trust’s income and capital, the court determined that the trust assets were effectively his property for the purposes of Section 79 of the Family Law Act 1975.
This decision fundamentally changed the landscape of asset protection through trusts in Australia.
Before Kennon v Spry, many people assumed that placing assets in a discretionary trust would put them beyond the reach of family law claims.
The High Court made it clear that where one party controls a trust and can benefit from its assets, those assets can be included in the property pool.
The court can also use Section 106B of the Family Law Act to set aside transactions, including trust restructures, that were made with the intention of defeating an anticipated property settlement claim.
This means that transferring assets into a trust shortly before or during a relationship breakdown is likely to be scrutinised and potentially reversed by the court.
When Might a Trust Offer Some Level of Protection?
A trust may offer some protection if the party to the relationship does not control the trust and is not the primary beneficiary.
If a third party, such as a parent or independent professional trustee, controls the trust and the party to the relationship is merely one of several potential beneficiaries with no effective control, the court may treat the trust assets differently.
In those circumstances, the trust assets might be considered a “financial resource” rather than “property” of the parties, which means the court may take them into account when assessing future needs but may not directly include them in the asset pool for division.
However, even in these cases, there is no guarantee of protection.
The court examines the specific facts of each case, including who established the trust, who funded it, who controls the trustee, and who has historically benefited from distributions.
If the evidence shows that the trust was established primarily for the benefit of one party to the relationship, the court may still find a way to include those assets in the settlement.
The practical reality is that trusts alone are not a reliable substitute for a BFA when it comes to protecting assets from a property settlement.
What Other Strategies Can Help Protect Your Assets?
Several practical strategies can strengthen your position if the relationship ends, even without a formal agreement.
While none of these methods provide the same level of protection as a BFA, they can support your case in a property settlement and help demonstrate the nature and extent of your contributions.
Why Is Keeping Detailed Financial Records Important?
Maintaining thorough financial records from the start of the relationship is one of the most practical things you can do to protect your position.
The court relies heavily on documentary evidence when assessing contributions and dividing property.
If you can show clear records of what you owned before the relationship, what you earned during it, and how your assets were used, you are in a much stronger position to argue for a favourable outcome.
This includes keeping bank statements, property valuations, loan documents, tax returns, superannuation statements, and records of any significant financial transactions.
If you own a business, obtaining a formal valuation at the start of the relationship can be particularly valuable.
This establishes a baseline value, which helps distinguish between the value you brought into the relationship and any growth that occurred during it.
Without this documentation, the court may have to estimate values, which can work against you.
Can Separating Your Finances Help Protect Your Assets?
Keeping your finances separate from your partner’s can help demonstrate which assets are individually owned and reduce the risk of commingling.
Commingling occurs when personal assets are mixed with shared or joint assets, making it difficult to trace the original ownership.
For example, if you deposit an inheritance into a joint bank account and those funds are used for shared expenses, the inheritance may lose its character as a separate asset and become part of the relationship pool.
By maintaining separate bank accounts for pre-existing savings, inheritances, and personal income, you preserve a clearer record of individual ownership.
However, this strategy has significant limitations.
Even if your assets are technically separate, the court can still include them in the property pool and divide them as it sees fit.
Keeping finances separate helps with the evidentiary burden, but it does not create a legal barrier to the court’s power under Section 79 of the Family Law Act 1975.
Should You Get a Business Valuation Before Entering a Relationship?
If you own a business, getting a professional valuation before entering into a marriage or de facto relationship is a sensible step.
A pre-relationship valuation establishes the value of the business at a specific point in time.
If the relationship later ends, this valuation can help the court distinguish between the value that existed before the relationship and any increase in value that occurred during it.
Without a valuation, the court may attribute a greater share of the business value to the relationship period, which could result in a larger portion being included in the property settlement.
A professional valuation also demonstrates that you took proactive steps to document your financial position, which can strengthen your overall credibility in any proceedings.
This is especially important for business owners, because the growth and success of a business during a relationship is often treated as a joint contribution, with the non-business-owning partner’s homemaking and parenting contributions being recognised alongside the financial contributions of the business owner.
How Does Estate Planning Interact With Asset Protection?
Estate planning is an often-overlooked component of asset protection, but it plays an important role in ensuring your assets are distributed according to your wishes.
A well-drafted will can direct your assets to specific beneficiaries and reduce the risk of disputes after your death.
However, your will does not protect your assets from a property settlement claim during your lifetime.
If the relationship breaks down, the court’s power under the Family Law Act 1975 operates independently of your estate planning documents.
Where estate planning becomes particularly relevant is when a BFA works alongside your estate plan.
A BFA can include provisions that address what happens to certain assets in the event of death, and it can be coordinated with your will to ensure both documents are consistent.
Without this coordination, there is a risk that your BFA and your will may conflict, creating uncertainty and potential legal challenges for your beneficiaries.
If you have children from a previous relationship, aligning your BFA with your estate plan is especially important.
A BFA can specify that certain assets are quarantined for those children, while your will ensures those assets pass to them upon your death.
This dual approach provides a more complete layer of protection than either document alone.
What Are the Risks of Relying on Informal Asset Protection Methods?
Relying on informal methods to protect your assets, such as verbal agreements, keeping assets in your name, or using trust structures without proper legal advice, carries significant risks.
The most fundamental risk is that none of these methods remove the court’s power to divide your assets under the Family Law Act 1975.
Verbal agreements about how assets will be divided are not enforceable in the same way as a written BFA.
Even if both parties genuinely intend to honour an informal arrangement, those intentions carry no legal weight if a dispute arises.
The court will apply the statutory framework and make its own determination about what is just and equitable, regardless of any verbal promises.
Transferring assets to family members or restructuring your finances shortly before or during a separation can also backfire.
The court has the power to set aside transactions that were made to defeat a potential property settlement claim.
If the court finds that you transferred assets to a family member or into a trust to avoid them being included in the property pool, those transactions can be reversed, and you may face additional penalties for failing to provide full and frank financial disclosure.
The safest and most reliable way to protect your assets in Australia remains a properly drafted and executed BFA.
While no legal document is completely immune from challenge, a BFA that meets all the requirements of the Family Law Act 1975 provides the strongest available protection outside of the court system.
How Can my law firm Help You Protect Your Assets?
Protecting your assets in Australia requires careful planning and the right legal advice.
Whether you are entering a new relationship, already married, or living with a de facto partner, having a clear understanding of your options is the first step toward securing your financial future.
As binding financial agreement lawyers in Australia, my law firm can help you put a BFA in place that is tailored to your specific circumstances.
Our fixed-fee approach means you will know exactly what the process will cost from the outset, with no surprise bills or hidden charges.
Contact us today by calling 1300 529 888 to discuss how a binding financial agreement can protect what matters most to you.
Frequently Asked Questions
Can a de facto partner make a claim on assets you owned before the relationship?
Yes, a de facto partner can claim assets you owned before the relationship under the Family Law Act 1975. If you have lived together for at least two years, or meet other qualifying criteria, the court can include pre-relationship assets in the property pool. The court considers all contributions, including homemaking and parenting, when dividing property.
Is a verbal agreement about asset division enforceable in Australia?
No, a verbal agreement about how assets will be divided is not enforceable under Australian family law. For an agreement to be legally binding, it must be a written binding financial agreement that meets the requirements of the Family Law Act 1975, including independent legal advice for both parties and signed certificates from each party’s lawyer.
Can you create a binding financial agreement without going to court?
Yes, a binding financial agreement is a private contract between the parties and does not require court approval or involvement. Both parties must receive independent legal advice from separate lawyers, and the agreement must be in writing and signed by both parties. Once properly executed, the BFA is legally binding without any court proceedings.
Does putting assets in a family trust protect them from property settlement?
Not necessarily. The High Court’s decision in Kennon v Spry [2008] HCA 56 established that trust assets can be included in the property pool if one party controls the trust. Courts examine who controls the trustee, who benefits from distributions, and how the trust was funded when deciding whether trust assets form part of the settlement.
What is the time limit for a property settlement claim in Australia?
Married couples must file a property settlement application within 12 months after the divorce becomes final. De facto couples have two years from the date the relationship ended. Courts can grant extensions in exceptional circumstances, but missing these deadlines may result in losing the right to seek a property settlement altogether.
Can a binding financial agreement be challenged after it is signed?
Yes, a BFA can be challenged on several grounds under the Family Law Act 1975. Common grounds include failure to receive proper independent legal advice, fraud, duress, undue influence, unconscionable conduct, or a material change in circumstances that would cause serious injustice. A carefully drafted BFA that meets all legal requirements is far more difficult to successfully challenge.