In Australia, prenuptial agreements—often called prenups, but formally recognised as binding financial agreements (BFAs)—aren't just dry legal paperwork.
They're a smart, strategic move for couples who want clarity on what happens to their money and property if things don't go to plan.
These agreements really shine when one or both partners are likely to build wealth during the relationship. Think entrepreneurs growing a startup, professionals on a steep income curve, or anyone expecting a sizeable inheritance.
A prenuptial agreement and future assets go hand in hand. A prenup lets you plan ahead and define exactly how current and future assets in prenuptial agreements—like businesses, real estate, shares, or superannuation—will be handled if you separate down the track.
A well-crafted prenup provides clarity, reduces the risk of costly legal disputes, and ensures each party's financial expectations are transparently outlined from the outset.
This article explores how BFAs can be structured to include future assets and income, their legal limitations, and practical guidance on drafting enforceable agreements under Australian family law.
Unified Lawyers has assisted couples across Australia in preparing prenuptial agreements tailored to their unique circumstances. Our Sydney, Melbourne, Queensland, and Gold Coast-based team has deep expertise in complex asset structures, cross-jurisdictional considerations, and family business protections.
Understanding Prenuptial Agreements
A prenuptial agreement in Australia is legally termed a binding financial agreement under section 90B of the Family Law Act 1975 (Cth).
This legislation allows parties who are about to marry to determine, in advance, how they will divide property, superannuation, debts, and other financial resources in the event of a relationship breakdown.
Importantly, BFAs are not confined to assets already held by the parties. They can be forward-looking and include provisions relating to future wealth or income, provided the terms are precise and consistent with the Act's requirements.
Prenups are legally binding documents, but their enforceability depends on meeting strict legal criteria. This includes both parties receiving independent legal advice, full financial disclosure, and fair treatment under the agreement.
Under section 90G of the Family Law Act 1975 (Cth), for a BFA to be binding, it must be signed by all parties, each must have received independent legal advice before signing, and a signed statement from the legal practitioner confirming this advice must be provided.
In practice, it is crucial that the agreement is tailored to the specific circumstances of the parties. For instance, if one party is expected to receive a significant inheritance or has interests in a family trust, these should be explicitly address in the agreement to ensure clarity and enforceability.
Do Prenups Cover Future Assets?
Do prenups cover future assets?
Future assets typically refer to property, income or financial resources acquired after the prenup is signed or following the marriage.
Examples include :
- A business that grows in value during the marriage
- Property acquired through investment or inheritance
- Shares, dividends, or other financial instruments
- Salary, bonuses, or intellectual property developed post-marriage
- Superannuation contributions and growth
To effectively protect these, the prenup must anticipate the types of future property and clearly state how each will be treated. Ambiguity is the enemy of enforceability.
The agreement should use direct language that links specific types of assets to each party's future entitlements.
Where future income or assets are reasonably foreseeable – such as a party being a beneficiary of a discretionary trust, or expecting significant capital growth from a business or investments – these should be specifically identified in the agreement to enhance clarity and reduce the risk of dispute.
Example Clause (Plain English):
"Any income, real estate, shares, inheritance, or other financial assets acquired by either party after the commencement of this agreement shall be considered separate property and remain solely owned by the acquiring party, regardless of the duration of the marriage."
Clauses like these can protect future income with prenup provisions, safeguard future earnings, protect family inheritances, and maintain the autonomy of business ventures, as long as they align with legal formalities.
Additionally, it's advisable to account for foreseeable but undefined assets—such as a family trust distribution or intellectual property royalties—by categorising them generically but consistently with the parties' intent.
It is also helpful to include recitals in the agreement that outline each party's expectations regarding such assets, to assist in future interpretation if the agreement is challenged.
Limitations of Prenuptial Agreements
While prenuptial agreements can be comprehensive, they are not immune from challenge.
Australian courts have discretion to set aside a BFA in certain circumstances, particularly if it's found to be unjust or was signed under questionable conditions.
This discretion arises under section 90K of the Family Law Act 1975 (Cth), which sets out the grounds which a Court may declare a financial agreement invalid or unenforceable.
Key Limitations :
- Lack of clarity : Vague language or contradictory clauses can result in sections being deemed unenforceable.
- Failure to account for future changes : If the agreement doesn't allow for significant life events, such as the birth of children, a party may challenge its fairness later. A common example is when the agreement does not contemplate parenting responsibilities or financial support obligations, which may render it unjust if circumstances change significantly.
- Coercion or duress : If one party signed under pressure, the agreement may be void. This was the central issue in Thorne v Kennedy [2017] HCA 49, where the High Court invalidated a prenup due to undue influence. This case reaffirmed that even if the formal requirements of the Act are satisfied, the surrounding circumstances (such as timing, emotional pressure, or lack of negotiation) can lead to a finding of unconscionable conduct or undue influence.
- Invalid execution : If legal requirements aren't met—like receiving independent legal advice or providing full financial disclosure—the agreement can be dismissed. Both parties must receive written statements from their legal advisers confirming that the advice was given, and these must be exchanged. Courts have found non-compliance with this requirement sufficient to invalidate a BFA, regardless of intent.
These limitations underscore the importance of working with experienced legal professionals when drafting a prenup.
In practice, well-drafted agreements include a review clause or allow for renegotiation after major life events to increase the likelihood of enforceability if challenged.
State Laws and Their Impact
The Family Law Act 1975 provides the primary framework for BFAs, applying across all states and territories. However, local procedural laws or state trust structures may impact how certain assets are handled within a prenup.
For instance, family trusts or discretionary trusts often used in New South Wales or Victoria may create complications when defining "ownership" of future assets.
In the landmark case Kennon v Spry [2008] HCA 56, the High Court held that assets held in a discretionary trust could be considered part of the matrimonial property if a party has control over the trust or is a beneficiary.
While federal law governs the prenup itself, trust assets may require additional documentation or clarification within the agreement.
It is essential to consider state-specific nuances, particularly when the parties have business or asset interests across multiple jurisdictions.
Therefore, when drafting a BFA, it is crucial to assess the nature of any trusts involved, the control one party may have over them and to explicitly address these in the agreement to ensure clarity and enforceability.
How to Draft a Prenup That Includes Future Assets
A well-drafted prenup is precise, customised, and legally sound.
Here are the key steps :
- Independent legal advice : Mandatory under the Family Law Act. Each party must be advised by their own lawyer, who must sign a statement confirming this.
- Specific drafting : Clearly state the parties' intentions regarding future income and property. For instance, "Any property acquired from inheritance shall remain the separate property of the inheriting party."
- Disclosure and transparency : Full disclosure of current finances, even if future assets are speculative.
- Superannuation and tax considerations : Superannuation splitting and tax consequences should be considered and drafted with input from financial experts.
A clear prenup may also address prenup protection future property and does a prenup protect future earnings using exact phrasing to reinforce enforceability.
For more guidance, visit our detailed prenup agreement page.
When to Review and Update Your Prenup
Circumstances change. As your relationship and finances evolve, so too should your prenup. Reviewing it regularly ensures continued relevance and fairness.
It is advisable to review your agreement every few years or when significant life events occur.
You should consider updating your prenup or creating a postnuptial agreement if :
- You have children (biological or adopted)
- One party inherits or is gifted significant wealth
- A business dramatically increases in value
- Either party becomes seriously ill or disabled
Section 90C of the Family Law Act governs postnuptial agreements, which allow couples to adjust terms after marriage without invalidating the original prenup.
Under this section, a financial agreement made during marriage can cover matters such as the division of property and financial resources, and spousal maintenance, in the event of a relationship breakdown.
As covered above, to be binding, the agreement must be in writing, signed by both parties, and each party receive independent legal advice before signing, the legal practitioners provide a signed statement confirming that the advice was given, and these statements must be exchanged between the parties.
Is a Prenup Right for Your Future?
So, does a prenup protect future assets?
Absolutely—but only if it's carefully drafted to address future wealth, income, and life changes.
A prenup serves as a proactive planning tool, allowing couples to avoid uncertainty and costly legal disputes down the track.
When properly executed, they can provide clarity and certainty regarding the division of assets and financial resources in the event of a relaitonship breakdown.
Unified Lawyers has the expertise to help clients protect their future.
Whether you're entering a second marriage, own a growing business, or simply want to avoid financial stress, a tailored prenup can offer peace of mind.
Our team of family lawyers understands the complexities involved in drafting BFAs, including considerations for future assets, business interests, and potential inheritances.
We work closely with clients to ensure their agreements are comprehensive, legally sound, and reflective of their unique circumstances.
Frequently Asked Questions
1. Can a prenup include future inheritance?
Yes. If a party is likely to receive an inheritance, it can be expressly addressed in the prenup.
The agreement should outline whether the inheritance will remain the sole property of the inheriting party or be shared. For higher certainty, the agreement can also specify how any income generated from the inherited asset (e.g. rental income or dividends) will be treated.
Including such provisions helps avoid future disputes and provides legal clarity. It is also important to clarify whether the inheritancce is expected outright or via a discretionary trust, as this may affect how the Court interprets the nature of the asset.
2. Does a prenup protect business income earned during
marriage?
Yes, but only if the agreement clearly states that business income is to be excluded from the marital asset pool.
This is particularly important for professionals or entrepreneurs whose business value or income is expected to grow significantly during the marriage.
The prenup can also address retained earnings, shareholdings, or future business acquisitions to ensure they remain quarantined from asset division.
In practice, the Court will assess whether the income has been applied for joint use (eg. Buying a family home) which could indicate it has lost its seperate charater.
The agreement should therefore includ provisions for how such income is to be managed and used.
3. What if I acquire assets after signing the prenup?
A well-drafted prenup can include clauses that extend to future property acquisitions.
This includes general wording such as "any asset acquired individually after the date of this agreement" to pre-emptively protect unexpected or unplanned acquisitions.
If not covered, such assets may be considered joint depending on how they are used or titled. Regular review of the agreement is crucial to keep it aligned with evolving asset profiles.
It is also helpful to include an express term that after-acquired assets remain separate unless jointly acquired or intentionally intermingled, to minimise dispute later.
4. Is a prenup still valid after kids are born?
Yes, the agreement remains legally valid.
However, the birth of children can significantly affect how a court views the fairness of the agreement.
Under Australian family law, if a BFA becomes impractical or inequitable due to a material change in circumstances, such as having children, it may be subject to challenge.
This is why reviewing and updating the agreement after major life events is strongly recommended.
In particular, under section 90K(1)(d) of the Family Law Act 1975 (Cth), a Court may set aside a BFA if a material change in circumstances relating to the care, welfare and development of a child has occurred and would case hardship if the agreement were not set aside.
5. What's the difference between a prenup and postnup?
A prenup, under section 90B of the Family Law Act, is entered into before marriage, while a postnup (section 90C) is made after the couple is legally married.
Both serve to determine how assets and financial matters are handled if the relationship ends. The key difference lies in timing, but each requires the same formalities, including independent legal advice and full disclosure, to be binding.
Importantly, parties cannot have more than one agreement in force covering the same subject matter at the same time (see section 90C(1)(aa) of the Family Law Act 1975 (Cth)). If a new agreement is made, it must expressly terminate the earlier one.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
