Our Guide to Establishing a Pre-nuptial Agreement
No one intends for their marriage or de facto relationship to eventually break down, but the reality is that one in three Australian marriages end in divorce. Considering this, the creation of a pre-nuptial agreement is an excellent way to ensure that both parties are financially protected in the case of divorce or separation. Here, we answer some common questions you may have about pre-nuptial agreements.
What is a Pre-Nuptial Agreement?
A pre-nuptial agreement (or prenup) is a legally binding contract between two people who intend to enter a marriage or a de facto relationship. This contract is a mutual agreement that determines what will happen to certain assets, property and debts owned by the parties in the event of a divorce or separation.
Prenups can deal with any and all financial issues between parties, including those related to spousal or child maintenance.
A prenup is a type of Binding Financial Agreement (or BFA) which is recognised under Australian Family Law. As such, the Family Law Act (1975) outlines strict conditions that must be complied with in establishing a prenup.
What are the Conditions which Prenups Must Meet?
The Family Law Act stipulates certain conditions that need to be met before a prenup is legally binding. These include:
- The pre-nuptial agreement must be in writing by each party.
- The agreement must be signed by each party.
- Before signing the agreement, each party must be provided with independent legal advice from an Australian legal practitioner about:
a. The effect of the agreement on their rights; and
b. The advantages and disadvantages to that party, at the time the advice was provided, to that party of making the Agreement.
Each party must receive a statement signed by their legal practitioner stating that the advice was provided to that party and a copy of the statement must be provided to the other party or their lawyer.
If these conditions are satisfied, the prenup is legally binding and can then be used to hold either party to account in the event of a divorce or separation.
What are the Advantages of a Prenup?
Preparing a pre-nuptial agreement can be majorly beneficial for both you and your spouse. In the event of a breakup, prenups can help provide:
- Legal and financial clarity – Divorces and separations, especially when acrimonious, can become complicated and standoffish when determining the division of property. A prenup determines ahead of time where different assets will go, preventing conflict and further costs resulting from a contentious split.
- Control over precious assets – Specific property of yours which you would like to maintain ownership of, whether it be family heirlooms or any other valuable assets you may have owned prior to the marriage, can be legally secured within the stipulations of the prenup.
In addition to financial reassurance, prenups can benefit relationships by clarifying the wishes of each party. A well-structured prenup can clear up uncertainties surrounding what would happen in the event of a potential divorce or separation, providing assurance for both parties and helping create a secure partnership which may even bring the couple closer together.
Do Pre-Nuptial Agreements Always Hold up in Court?
While prenups are an excellent way to minimise risk, there are certain circumstances where stipulations within a prenup may be set aside by a Family Law Court. These include situations concerning:
- New children – The prenup may be set aside if there has been a material change in circumstances relating to the care of children and the person who has the caring responsibility for the child would suffer hardship if the prenup was not set aside.
- Enforceability – If the Court finds one party was somehow coerced into signing or unduly pressured into signing the prenup, it may be set aside.
- Unfair agreements – If the court regards the prenup to be unreasonably inequitable, the agreement may not stand.
- Other violations of the Family Law Act – If any other stipulations under the Family Law Act (1975) are not met, including the non-disclosure of financial positions or the parties not consulting independent legal practitioners, the prenup may be deemed invalid.
Is a Pre-Nuptial Agreement Right for Me?
If you are about to enter a marriage or de facto relationship, you should take time to consider your options regarding a prenup.
At Pullos Lawyers, our experienced lawyers can help you create a prenuptial agreement which will be legally binding as well as ensure that your future plans are catered for in the case of a relationship breakdown. We can also assist with property settlements overseas, LGBT law, spousal maintenance and many more family law issues.