The Family Law Act divides binding financial agreements, rather prosaically, into financial agreements occurring before, during and after marriage. The first of these is more colloquially known as a prenuptial agreement.
Prenuptial agreements are often considered to be the sole purview of multi-millionaires looking to protect their fortune from gold-diggers. But of course, it can do just that: there’s little reason to warrant giving away half of the assets you owned prior to the marriage. The truth, however, is that these can be sensible and prudent investment for both parties.
After all, in the unfortunate event your marriage breaks down, would you rather the discussion regarding the division of your assets occur when you both love each other, or afterwards?
Thus, it allows both of you to protect the property (whether real or personal) that you most care about. You can also use it to determine how both of you will be cared for after the marriage: whether maintenance is to be paid, and how much. Or, it could concern who gets the family pet, since it’s difficult to split a dog.
Hence, prevents either party applying to the Family Court over a topic that the agreement covers. This reduces legal fees, court fees and your time.
How Do You Make a Binding Prenuptial Agreement?
Unlike normal contracts, prenuptial agreements have very specific forms that have to be followed. This is to make it easier for these agreements to hold up in court. The specific requirements are listed in section 90G of the Family Law Act, but generally:
- the agreement must be written. An oral agreement won’t suffice. This is because they are quite complex documents, and specificity is vital;
- both parties must receive independent legal advice from a legal practitioner. This advice must tell each of you what the agreement means for you, in terms of your rights, and the advantages and disadvantages of the agreement. It is encouraged that you get this advice in writing;
- the agreement must contain a clause stating you have each obtained such advice;
- a signed certificate from the legal practitioner attesting to this advice must be attached to the agreement;
- each party must sign the agreement; and
- each party must have the original, or a copy of the original prenuptial agreement.
However, even when these steps have been satisfied, these – like all financial agreements – are not a guarantee. There are circumstances in which they can be overturned, and as such, it is highly recommended you have a lawyer draft this for you, or at the very least, have them advise you throughout the process. A brief list of some of these circumstances includes where:
- Any of the above formal steps have not been satisfied;
- Either party failed to disclose, or concealed or materially misrepresented the extent of their assets and resources at the time the agreement was signed;
- Either party engaged in fraud in obtaining the agreement, or entered into the agreement to defraud the other, or a third, party;
- Either party engaged in unethical behaviour in getting their partner to sign the prenuptial agreement;
- The agreement is impracticable, vague, unclear, or is otherwise unable to be carried out;
- A change has occurred relating to a child which will cause that child to suffer hardship.
Your legal practitioner will also be able to tell you of any potential problems with the agreement. For instance, section 90F overturns any clause that purports to prevent maintenance payments if one of the parties is not able to financially support themselves when they signed the agreement. Or, the entire prenuptial may be void if you fail to disclose the full extent of your assets, or the agreement is unclear and vague, or there was unethical or fraudulent behaviour involved.
Do Prenuptial Agreements Last Forever?
Well, yes and no. By their nature, prenuptial agreements do last, even beyond the death of either party. You can set specific conditions for what happens in the event of your death, but generally, your property will be left to your heirs and not your partner.
However, that doesn’t mean these types of agreements cannot be changed if circumstances change, or you both want to modify the agreement in some way. You and your partner, as the parties to the agreement, have every right to change the agreement if, and when, you so choose. Just remember that you need to appropriately cancel or modify your prenuptial agreement.
Your legal practitioner can advise you of all of these intricacies when you receive advice as to the financial agreement. This will help ensure it is binding, and provide the necessary protection to both of you should the relationship fall apart.
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