Does a Prenup Protect an Inheritance in Australia?

You have money or property coming to you from a parent’s estate, you are getting married, and you want to know whether a prenup keeps it yours.

Yes, it can. But only if three things are true: the inheritance is named and described in the agreement, the agreement is legally binding, and, if you have an earlier relationship, that property settlement is actually finalised. Most people deal with the first two and never think about the third. That is the one that costs them.

One naming point before we go further. In Australia the legal term is not prenup, it is a binding financial agreement, or BFA. Same idea, same document, and I will use both words here.

I will take each condition in turn, then cover what happens on death, when a court can throw the agreement out, whether any of it works if you are not married, and what it costs.

This is not a rare problem. The Productivity Commission put the total value of wealth transferred in Australia over two decades at about $1.5 trillion, roughly 90 per cent of it in inheritances, and expects transfers to rise four-fold in real terms by 2050. More families are having this conversation than ever. Most of them are having it too late.

When a prenup protects your inheritance, and when it doesn’t

Here is the whole answer before the explanation.

You are likely protected if:

• the inheritance, or the inheritance you are expecting, is specifically identified and described in the agreement
• the agreement is in writing and signed by both of you, and each of you had independent legal advice from your own lawyer before signing (s 90G, Family Law Act 1975)
• you both made full and frank disclosure of your finances before signing
• you keep the inherited money or property separate, rather than putting it into a joint account, the mortgage or a renovation

You cannot rely on it if:

• the agreement only gestures at “any future inheritance” without describing it
• one of you had no independent advice, or you both used the same lawyer
• something was hidden when you signed
• you have already mixed the inheritance into shared assets
• you separated and never finalised the property settlement

Most of those failure points are avoidable. The last one is the one nobody warns you about, and I will come back to it.

Your inheritance has to be named, not assumed

This is where a lot of people get caught out. They sign an agreement, assume the inheritance is dealt with, and never check what the document actually says about it.

A pre-marriage agreement is made under s 90B of the Family Law Act 1975. It can deal with property or financial resources either of you hold when you sign, and property or financial resources acquired later during the marriage. That is why a future asset like an inheritance can be covered at all.

Covering it and covering it properly are two different things. A clause that describes the expected inheritance, where it is coming from, and how it is to be treated does far more work than a line gesturing at “any inheritance I may receive”. The first identifies an asset. The second identifies nothing in particular, which is what leaves it open to argument later.

You do not need to know the amount. That is the objection I hear most, usually from someone who feels awkward asking a living parent what is in their will. You are not valuing the estate. You are describing the asset well enough that everybody knows, years later, exactly which money the agreement was talking about: who it is expected to come from, what form it is likely to take, and how the two of you agreed it would be treated.

Then the follow-through, which almost nobody does. When the inheritance actually lands, have the agreement reviewed. What was an expectation is now a real asset with a real value sitting somewhere specific, and the document should say so. If you want to read the framework yourself, the Federal Circuit and Family Court of Australia sets out what a financial agreement is and what it can deal with.

How a prenup actually protects an inheritance

Strip the mechanism back and it does four things.

• It records the inheritance as yours and not for division, so there is far less to argue about later.
• It identifies the asset, which keeps it traceable after separation instead of dissolving into a general pool.
• It can be replaced by a new agreement during the marriage, so it moves as your circumstances move.
• It can cover superannuation, and any income or growth the inherited asset produces, not just the original sum.

A prenup does not only deal with what you own the day you sign it. It also covers money that has not arrived yet: an inheritance you are expecting, a business you are building, a property you plan to buy together. If you want any of that kept separate, the agreement is where you say so.

For it to hold, the agreement has to be binding. Under s 90G that means writing, signatures from both of you, and independent legal advice for each of you, from your own lawyer, before you sign.

Here is the catch. The whole mechanism runs on identifying an asset, so it only keeps working while the asset can still be identified. There is a word for what undoes that, and it undoes more inheritance protection than any drafting error: commingling, mixing inherited money into shared assets until it stops looking like yours.

It is rarely deliberate. The money arrives during a stressful year, it sits in the joint account because that is the account both of you use, and then some of it goes into the mortgage and some of it into a bathroom renovation. Nobody made a decision. Two years later there is no line to draw between what came from the estate and what came from the two of you, and the protection the agreement was meant to give weakens with it. The practical version is one line: keep the named asset in your own name, with the estate documents and the bank records behind it, so it stays traceable back to the estate.

Does a prenup override a will?

Neither document automatically beats the other. What the law does say is that a binding financial agreement continues to operate despite the death of a party, and it operates in favour of and binds that party’s legal personal representative (s 90H, Family Law Act 1975).

In plain terms, the executor steps into the deceased’s shoes and has to honour the agreement. So if the prenup says one thing about a property and the will says another, that contradiction does not resolve itself. Someone has to argue it out at the worst possible time, and that argument is slow and expensive.

Have both documents drafted with each other in mind. Your wills and estates lawyer and your family lawyer should be reading the same page.

One boundary worth naming. Whether a surviving spouse can still bring a family provision claim against the estate is a separate question under New South Wales succession law. It is a real question, and one for a wills and estates lawyer, not this page.

When a court can set a prenup aside

A word of caution before you get comfortable. The bigger risk to your inheritance is not a missing clause. It is the whole agreement falling over.

A court can set a financial agreement aside on the grounds in s 90K of the Family Law Act 1975. The main ones, in plain words:

• fraud, which includes failing to disclose a material matter
• the agreement is void, voidable or unenforceable
• a material change relating to the care, welfare and development of a child of the marriage, where the child, or the parent who has caring responsibility for them, will suffer hardship if the agreement stands
• unconscionable conduct

The section runs wider than those four, so treat that as the short list rather than the whole of it, and go through it with your own lawyer.

This is not theoretical. In Thorne v Kennedy [2017] HCA 49 the High Court set aside two financial agreements for unconscionable conduct. One of them was signed four days before the wedding, against the signing party’s own legal advice.

So here is the legal lesson. Honest disclosure and genuinely separate advice are the two things fully inside your control. Signing days before the wedding is the pattern that gets challenged. There is more detail on how valid are prenuptial agreements in Australia if you want to go deeper on what makes one stand up.

A real matter: the agreement is only half the job

Everything above is about the document. Here is the part that has nothing to do with the document, and it is the failure I see most often.

We had a case where a husband delayed property proceedings almost three years after separation, and by then his wife had inherited property. Because the settlement wasn’t finalised, that inheritance was pulled into the property pool and shared between the parties. If someone had acted earlier, the outcome would have been very different.

The lesson is uncomfortable and simple. An unfinalised settlement leaves the door open. An inheritance that arrives while your affairs are still unresolved can be drawn into the property pool, whatever anyone intended.

Deadlines do the heavy lifting here. An application for property orders must generally be filed within 12 months of a divorce order taking effect, and within two years of a de facto relationship ending (s 44, Family Law Act 1975). After that you need the court’s permission, and that is not a formality.

If you have separated and never finished the property settlement, deal with that first. The agreement was the easy half.

Does it work if you are not married?

Yes. De facto couples make the equivalent agreement under Part VIIIAB of the Family Law Act, and it does the same job on an inheritance, including after death.

The mechanics are identical: named and described, in writing, signed, independent advice each side, honest disclosure. The one difference to hold onto is the clock. When a de facto relationship ends, the two-year filing window runs from separation, because there is no divorce order to start it.

What does a prenup cost?

There is no single figure, and anyone who quotes you one without asking about your circumstances is guessing.

What drives the cost is complexity. Two people with clear, separate assets need a simpler document than a couple with a business, a trust or superannuation to divide. And because each of you needs independent advice from your own lawyer, every prenup carries two sets of legal fees, not one. That catches people out, so budget for it.

Where that leaves you

Three conditions, one sentence: the inheritance has to be named and described in the agreement, the agreement has to be properly made and honestly disclosed, and any earlier property settlement of your own has to be closed off rather than left hanging.

So have it drafted properly rather than adapted from a template. Get your own lawyer, not a shared one. And if there is an old settlement sitting unresolved, close it.

If money is coming to you and you are not certain the agreement in your drawer actually covers it, that is a ten-minute conversation, not a project. Call 1300 614 732 or send us a message, and one of our prenup lawyers will tell you plainly whether the document does what you think it does.