Divorce is a challenging and emotional process, and one of the biggest concerns for many Australians is how to protect their assets. Whether you’re entering a marriage, in a de facto relationship, or considering separation, understanding how to safeguard your wealth is crucial.
In Australia, family law operates under the Family Law Act 1975, which governs property settlements during divorce or separation. The courts aim for a fair and equitable division, but “fair” doesn’t always mean a 50/50 split. If you want to protect your assets, you need to take proactive steps—before, during, and even after a relationship.
This guide will walk you through the best strategies to protect your assets from divorce in Australia in 2025.
1. Understanding How Assets Are Divided in an Australian Divorce
Before diving into protection strategies, it’s essential to understand how Australian courts divide assets in a divorce.
The Four-Step Property Settlement Process
- Identify the Asset Pool – All assets, liabilities, and superannuation (regardless of whose name they’re in) are considered.
- Assess Financial Contributions – This includes income, inheritances, gifts, and sacrifices (e.g., staying home to raise children).
- Consider Future Needs – Factors like age, health, earning capacity, and childcare responsibilities are weighed.
- Determine a Fair Split – The court decides what’s “just and equitable,” which may not be equal.
What’s at Risk?
- Jointly owned property (family home, investments)
- Separate assets (inheritance, pre-marriage assets—unless “mixed” with joint funds)
- Superannuation (can be split even if only one partner contributed)
- Business interests (if the other spouse contributed directly/indirectly)
Now, let’s explore how to protect what’s yours.
2. Pre-Marriage Protection: Binding Financial Agreements (BFAs)
One of the most effective ways to protect assets is a Binding Financial Agreement (BFA), commonly known as a prenuptial agreement.
How Does a BFA Work?
- It’s a legal contract made before, during, or after a relationship.
- Outlines how assets will be divided if the relationship ends.
- Must be properly drafted, with both parties receiving independent legal advice.
Why Get a BFA?
✅ Protects pre-marriage assets (e.g., property, inheritance)
✅ Clarifies financial expectations
✅ Can safeguard business interests
✅ Avoids costly court battles later
Limitations of a BFA
- Can be overturned if deemed unfair, fraudulent, or improperly executed.
- Must be updated if circumstances change (e.g., having children).
Tip: If you’re already married, a Postnuptial Agreement can still be made.
3. Keeping Assets Separate (Avoiding ‘Mixing’)
Even without a BFA, keeping assets separate can help. The key is avoiding “commingling”—where separate assets become marital property.
Strategies to Keep Assets Separate:
🔹 Maintain separate bank accounts (don’t deposit joint funds into personal accounts).
🔹 Document inheritances/gifts (keep them in your name only).
🔹 Avoid using joint funds for personal asset improvements (e.g., renovating a property you owned before marriage).
🔹 Consider a trust (more on this later).
Example: If you inherit $200,000, keep it in a separate account. If you use it for a joint home deposit, it may become marital property.
4. Using Trusts to Protect Wealth
A trust can be a powerful tool to shield assets from divorce—if set up correctly.
Types of Trusts for Asset Protection:
✔ Family Trusts (Discretionary Trusts) – Assets are owned by the trust, not you personally.
✔ Testamentary Trusts – Created via a will, useful for inheritance protection.
✔ Hybrid Trusts – Combines features of different trusts for added flexibility.
Pros & Cons of Trusts in Divorce
| Pros ✅ | Cons ❌ |
|---|---|
| Can protect business assets | Courts may still consider trust assets if you control them |
| Limits direct ownership | Complex to set up & maintain |
| May reduce tax liabilities | Can be expensive |
Key Consideration: If you’re the appointer or trustee, courts may still treat trust assets as part of the marital pool.
5. Protecting Your Business From Divorce
If you own a business, divorce can threaten its stability. Here’s how to safeguard it:
Business Protection Strategies:
📌 Keep business finances separate (no joint accounts).
📌 Have a shareholder agreement (if in a partnership).
📌 Consider a BFA (specify business ownership terms).
📌 Pay yourself a market-rate salary (avoid underpaying to hide assets).
Warning: Courts can order a business valuation and force a sale if necessary.
6. Superannuation & Divorce: What You Need to Know
Superannuation is treated differently from other assets but can still be split.
How Super Splitting Works:
- Courts can order a percentage split (not automatic 50/50).
- You can agree privately via a Superannuation Agreement.
- Some super funds (e.g., SMSFs) have additional complexities.
Tip: Consider a superannuation binding agreement to control how your super is divided.
7. What If You’re Already Divorcing? (Last-Minute Strategies)
If divorce is imminent, you still have options:
Damage Control Tactics:
🔸 Negotiate a fair settlement (mediation can save time & money).
🔸 Gather financial records (prove what’s yours).
🔸 Avoid hiding assets (courts penalize dishonesty).
🔸 Consult a family lawyer (strategic advice is critical).
Final Thoughts: Proactive Planning is Key
Divorce can significantly impact your financial future, but with the right strategies, you can minimize risks. Whether it’s a Binding Financial Agreement, trust structure, or smart asset management, taking action early is the best defence.
Quick Recap:
✅ Consider a BFA (prenup/postnup)
✅ Keep personal & joint assets separate
✅ Use trusts for long-term protection
✅ Protect business interests with legal agreements
✅ Understand superannuation splitting rules
If you’re unsure where to start, consult a family lawyer who specializes in asset protection. A small investment in legal advice today could save you thousands (or millions) later.
Have questions? Drop them in the comments below or reach out to a legal professional for personalized advice.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult a qualified family lawyer for your specific situation.
Would you like help finding a specialist lawyer? Let us know—we’d be happy to point you in the right direction!
