No longer a stigma but a necessity
Having a prenuptial agreement (prenup) doesn't mean that you expect your marriage or relationship to fail nor does it suggest that you don't trust your partner in relation to your finances.
Prenups, Postnups and other Nups just mean you agree and keep everything out of expensive Family Court proceedings!
What are they?
Prenuptial agreements refer to the legally binding financial agreement reached between two parties prior to marriage or defacto relationship.
Postnuptial agreements refer to the legally binding financial agreement reached between two parties during the marriage or defacto relationship.
They will stipulate how in the event of a separation, all or any of the property of the parties is to be distributed. They will also cover financial resources and spousal maintenance.
Technically called a binding financial agreement ("BFA")
A prenuptial, a premarital agreement, prenup, prenupt or postnup is a contract recognized in Australia by the Family Law Act 1975 that you and your partner enter into.
Whether it is a marriage or a de facto relationship, binding financial agreements can be made before, during or after the relationship.
Prenuptial checklist for a couple - what it can cover!
- You don't want the division of your property and assets decided by the courts
- You want to avoid the emotional turmoil of a divorce
- You want to keep pre-marital assets separate
- A safeguard and financial protection for both parties
- The other party has debt that you are concerned by
- One party owns a business
- One party is from a wealthy family and wants to protect a potential inheritance
- Parties who already have children from a previous relationship
- Spousal support
- Real estate
- Superannuation & pension entitlements
- Joint investments
- Joint businesses
- All future aspects such as children and future asset purchases
Can a de facto relationship get a prenuptial agreement?
The same circumstances that arise in a marriage can occur in a de facto relationship as well. As a result, since 2009, the same laws apply to de facto relationships. This means that a couple in a de facto relationship can get a prenup or postnup.
When can a prenup be challenged or be void, null or inffective?
If the agreement has not been done in accordance with legal requirements it will not be upheld and you will likely have to resolve things in the Family Law Court.
This means two independent lawyers- one for each party or it's a no go!
Circumstances when a court will intervene include when either of the parties signed the agreement on the day of their wedding, as this can be considered as unconscionable conduct.
For example, one party insists that the marriage will not proceed unless the agreement is entered into. If one person required their partner to sign the prenup just before the wedding, then the agreement may be overturned.
If it comes to light that fraud was at play, such as one party not disclosing all of their assets, this may result in the agreement being considered invalid; or when a person does not make known the full extent and value of their finances at the time the prenup was written up and signed.
If the requirements of the agreement were not fulfilled during the course of the marriage, the prenuptial agreement can be deemed as unenforceable i.e.
- A change to the couple's circumstances, for instance the couple had children.
- A party has entered into the Agreement for the purposes of attempting to defraud or defeat a creditor or creditors.
Children support & factors in prenuptial agreements
When entering a binding financial agreement, it is important to consider all future possibilities. This includes children. Even if you are not sure whether you and your partner want children, it is important to include details regarding child support and maintenance.
If you do have children in the future, and this wasn't mentioned in the prenuptial agreement, then any understanding is not legally binding.
Under Section 90A of The Family Law Act 1975, prenuptial agreements can only provide for child support if the child has been born and can be named. The exact amount of maintenance will need to be included in the agreement.
Keep in mind that the terms of the prenuptial marriage contract can be overridden by the Court if it is deemed to not be in the best interest of the child.
Wills trusts & other- made in contemplation of marriage/de-facto?
Lastly, there are other matters that need consideration before marriage.
A Will that is made before marriage is usually revoked when the marriage occurs, unless the Will is made in contemplation of marriage.
It is also important to look at the way in which an asset is legally owned so as to meet all your needs after death such as testamentary and inter vivos trusts, gifts and binding death nominations of certain insurances and funds.