A prenup agreement is often somewhat contentious and can cause tension between engaged couples. As outlined in the Family Law Act 1975, a prenup is a binding financial agreement (BFA) between two people planning on getting married or planning to live together in a shared life (like a de facto relationship). In essence, the agreement outlines what is to occur regarding each person’s assets and debts that they bring to the relationship. It stipulates how the finances will be split should the couple separate in the future.
If you are about to get married or move in with your partner, then it might be worth signing a prenup, as a way of protecting your assets and theirs. However, you should be aware that proposing this scenario can be sensitive to your partner, so make sure you address the matter with sensitivity and understanding.
What makes a prenup legally binding?
There are several legal prescriptions that you need to adhere to when drafting the agreement. Most of these determinants are outlined in the Family Law Act (1975). Some of the critical prescriptions are as follows:
- The agreement must be in writing
- Each person must receive independent legal counsel before signing (can’t share the same solicitor)
- The solicitors representing both parties must have Australian qualifications
- The agreement must contain a complete disclosure of how the assets will be dispersed and each person’s financial status when signing the document
- The signees must have agreed to the document voluntarily (free from coercion, undue influence or any form of duress)
Why you should consider getting a prenup
There are many great reasons why you should organise a financial agreement with your partner before committing to marriage or a de factor arrangement. Here are some of the best reasons:
Helps with divorce proceedings (should they occur)
If you and your partner discover that your marriage or relationship is untenable, then having a prenup in place can help smooth this process. While it is seen as “hedging your bets” or “betting against your marriage”, if you decide to pursue a divorce, having a binding financial agreement will ensure that there is no confusion or ambiguity about how the financial assets will be split. It will also save you a lot of time and money.
Reduces animosity between both parties
Another benefit of getting a prenup is that it can reduce acrimony between partners. This is because both people in the relationship can end their connection on transparent terms, which can help minimise bitterness and provide for an amicable end.
Protection for both parties
The stigma of binding financial agreements is they are viewed as protecting one person more than the other. Think of it this way, one person in the relationship is significantly wealthier than the other, so they ask their future partner to sign the agreement as a way of protecting themselves. It’s easy to see why this could foster tension and unhappiness in the relationship; however, it shouldn’t be viewed like that. The agreement is designed to protect both parties, as this is the fairest outcome.
Can the Court overturn a prenup?
It is essential to recognise that the Court can overturn these arrangements. The most common reasons for overturning the agreement are as follows:
If one party doesn’t reveal the full extent of their valuables or assets, then the agreement can be invalid. This is why complete transparency is critical.
Likewise, the agreement may no longer be legally binding if there is evidence to suggest that it was created when one party was being unfairly pressured to sign it.
If the agreement was created when children weren’t in the picture (and there are not future provisions for splitting assets, should there be children in the equation), then the agreement can be set aside.