A prenuptial agreement provides for certainty in the event of a relationship breakdown and allows separating parties to avoid the stress and expense of litigation by removing the need for the parties to go to court.
What is a Prenupital Agreement?
A prenup, or a binding financial agreement (BFA) as they are know in Australia, is a contract between two persons who are married or in a de facto relationship which sets out an agreement regarding the division of property and finances in the event of separation.
Who can Enter into a Prenup?
In Australia, a BFA may be entered into by any of the following:
- Parties who are contemplating entering into a marriage or de facto relationship;
- Parties who are married or in a de facto relationship; or
- Parties to a marriage or de facto relationship which has broken down.
What Can be Covered in a Prenup?
A BFA will set out an agreement regarding the division of property and financial resources, and may also set out an agreement for spousal maintenance or child support.
When Should You Consider Entering into a Financial Agreement?
Financial agreements allow parties to protect any property or assets which they have acquired, and it may be advisable to enter into a financial agreement where:
- You have significant assets or property which you would like to protect;
- You are expecting to receive a substantial gift or inheritance;
- You have children from a previous marriage and would like to protect their interests in your property; or
- You have interests in trusts or companies which you would like to protect.
Entering into a Binding Financial Agreement
A financial agreement will only be binding if the following requirements are met:
- The agreement is in writing and signed by both parties.
- Each party has received independent legal advice from a lawyer about the effect of the agreement and its advantages and disadvantages.
- A statement from a lawyer is provided by both parties which confirms that they have received the required legal advice.
Non-Compliance with Formal Requirements
A BFA may still be considered binding even where the requirements for legal advice have not been strictly complied with, if the Court considers that it would be unjust and inequitable if the agreement was not binding.
Effect of a Financial Agreement
If your BFA is binding, it will oust or exclude the Family Court's jurisdiction to make orders effecting property division. This means you cannot apply to the Court for a property settlement unless your BFA is set aside or deemed unenforceable.
Setting Aside a Financial Agreement
The Court may set aside a financial agreement in the following circumstances:
- Where the agreement was obtained by fraud, including the failure of a party to disclose any material matter;
- Where either party has entered into the agreement for the purpose of defrauding a creditor or in a manner that recklessly disregards a creditor’s interests;
- If the agreement is uncertain or incomplete;
- If the agreement is void, voidable or unenforceable under contract law or equity;
- Where the agreement was obtained by undue influence, unconscionable conduct, mistake or misrepresentation;
- If circumstances have arisen that make the enforcement of the agreement impracticable; or
- Where there has been a material change in circumstances and a party will suffer serious hardship if the court does not set aside an agreement.
Termination of a Financial Agreement
The parties to the financial agreement can terminate an agreement by entering into a new financial agreement or entering into a termination agreement. In both cases, parties will need to receive independent legal advice and ensure the agreements are signed and in writing.
DISCLAIMER: The information provided above is published for general informational purposes only and is not intended to be nor should it be relied upon as a substitute for legal or other advice.