Everything You Need to Know About Prenuptial Agreements in Australia

The words “prenuptial agreement” can invoke doubt and fear into the relationship.

When you are swept up in the romance of being engaged to be married, or simply finding someone you want to spend the rest of your life with, conversations around what would happen if the relationship ended, is difficult to consider. The words “prenuptial agreement” can invoke doubt and fear into the relationship. Does it mean one partner doesn’t trust the other? Does it mean that the relationship is doomed from the get go?

Let’s find out. Here is everything you need to know about prenuptial agreements in Australia.

What Actually IS a Prenup (Legally Speaking…)

A prenuptial agreement, or in Australian legal terms, a Binding Financial Agreement (BFA), is a legally binding financial agreement between two people. The agreement can be entered into, before, during, or after the relationship – whether it’s a marriage or a de facto relationship. The agreement outlines how a couple’s assets, for example, savings, property, superannuation and businesses, will be divided and how debts and liabilities will be repaid if the relationship ends in divorce or separation. Unfortunately, this is not uncommon — about 40% of marriages end in divorce.

How to Create One

There is a very strict legal process that must be followed to create a prenuptial agreement and it must be prepared by solicitors specialising in family law. Before entering into an agreement, each party must receive independent legal advice from an Australian lawyer.

These solicitors will take detailed instructions from each party about their financial circumstances, future intentions, for example having children, any contributions that they have already made to the property and any wishes around estate planning. Each solicitor will then provide each party with a detailed letter of advice. A draft is drawn up and negotiated and the final agreement is signed by the couple, free from coercion, duress or undue influence, and their solicitors will sign off certificates which form part of the binding agreement.

Why Do I Need One?

So why enter into a prenuptial agreement? It may be appropriate when one party has considerably more assets than the other when the relationship began, if one party is set to receive an inheritance in the future, or if this is a subsequent relationship and there are children from former relationships that need to be financially protected.

Although prenuptial agreements are legally binding, there are actually situations in which they can be challenged. This happens most frequently when there is a child from the partnership. If the agreement does not provide for circumstances relevant to the child/ren, it may be overturned. Other situations include, if one party did not disclose the value of their assets completely when the prenup was drafted and signed, if one party had unreasonably placed pressure or tried to coerce the other to sign, if signing the agreement had been a condition of the wedding continuing, or if the agreement is not deemed to be fair and equitable.

What are the Benefits of a Prenup?

Prenuptial agreements do have many benefits, even though it may not seem like it at first. The agreements actually can make a separation or divorce less contentious and will keep settlement issues out of court, which can be very expensive. Because the prenup was agreed to fully by both parties, no one can accuse the other of being unfairly treated, and the relationship has the potential to end on better terms.

a

Finally, prenups can actually make a relationship stronger, which in turn makes divorce and separation less likely. The reason for this is because when both parties agree creating a prenuptial agreement, it means that they have been transparent and open in their discussions about their current finances and what their expectations are.  

When both partners are on the same page and know exactly what the other wants and needs, the chances of having a successful relationship increases trememdously.

Are you thinking about getting a prenuptial agreement? Or do you have one?