Estate Planning and Binding Financial Agreements: A Powerful Combination for Protecting Family Wealth
In our previous article, we explored how a Binding Financial Agreement (BFA) can help protect intergenerational wealth and provide certainty if a relationship breaks down. However, a BFA is only one piece of the puzzle.
For families seeking to preserve assets across generations, estate planning and Binding Financial Agreements often work best together.
Different tools, different purposes
A Binding Financial Agreement primarily deals with what happens to assets, liabilities, and financial resources if a relationship ends during the parties’ lifetimes.
Estate planning, on the other hand, deals with what happens to your assets upon your death or loss of capacity.
Whilst both are important, neither provides complete protection on its own.
For example:
- A BFA may protect an inheritance if a relationship breaks down.
- However, without proper estate planning, those same assets may still be vulnerable to disputes after death.
Similarly:
- A carefully drafted Will may leave assets to children or grandchildren.
- However, if a beneficiary later separates from their spouse or partner, those assets may become exposed in family law proceedings if no asset protection measures are in place.
Protecting family inheritances
Many parents and grandparents spend decades building wealth with the intention of passing it to future generations.
This may include:
- Family farms
- Family businesses
- Investment properties
- Cash investments
- Share portfolios
- Valuable personal assets
A comprehensive strategy may involve:
- Preparing an up-to-date Will
- Establishing testamentary trusts
- Appointing appropriate executors and trustees
- Preparing Enduring Powers of Attorney and Advance Care Directives
- Considering whether children or beneficiaries should enter into Binding Financial Agreements
When these measures work together, there is often a greater likelihood that assets remain within the family bloodline and are preserved for future generations.
Testamentary trusts and asset protection
One of the most effective estate planning tools is a testamentary trust.
A testamentary trust is a trust created by a Will that comes into existence upon death.
Whilst every family’s circumstances differ, testamentary trusts can provide:
- Greater flexibility in managing inherited assets
- Potential taxation advantages
- Protection for vulnerable beneficiaries
- Additional protection against creditors and relationship breakdowns
Where a beneficiary later experiences a separation, assets held within a properly structured testamentary trust may be better protected than assets inherited outright.
Family businesses and farming families
For farming and business families, succession planning is often about much more than transferring assets.
Families frequently wish to:
- Keep farming land within the family
- Ensure the continuation of a family business
- Treat children fairly while recognising differing contributions
- Minimise future disputes between siblings
- Protect assets from relationship breakdowns
In these circumstances, a coordinated approach involving both estate planning and Binding Financial Agreements can provide greater certainty and reduce the risk of future conflict.
Planning while relationships are strong
The most effective asset protection strategies are usually implemented well before problems arise.
It is often easier to have conversations about succession planning, inheritances, and relationship expectations when family relationships are positive and everyone has the opportunity to consider matters carefully.
Waiting until separation, illness, or death often limits available options and can increase the likelihood of disputes.
Taking a holistic approach
Every family is different, and there is no single solution that suits everyone.
The most effective plans are tailored to the family’s circumstances, taking into account:
- Family structure
- Business interests
- Farming operations
- Existing trusts and companies
- Intended inheritances
- Future succession plans
At Peter Fisher Lawyers, our Family Law and Estate Planning teams work closely with families to develop strategies that protect assets both during life and across generations.
If you would like advice about protecting family wealth, succession planning, or whether a Binding Financial Agreement should form part of your broader estate plan, our team would be pleased to assist. You can contact or office on 08 8296 2690 or enquiry@peterfisher.com.au.