For many years pre-nuptial agreements have been a no-go-zone for Australian lawyers, dubbed as risky and inevitably unenforceable. However, more recently the approach towards pre-nuptial agreements has softened as more and more lawyers have decided to help clients take full advantage of s90B of the Family Law Act 1975, which allows specifically for parties contemplating marriage to enter into binding financial agreements regarding the division of property in the event of separation.
It is true that where prenuptial agreements have been challenged, the Courts have been stringent in their examination of the validity of the document. However, when done correctly, they are enforceable and can be an efficient asset protection tool. The legislation is clear in it’s intention to expressly empower individuals to create privately negotiated agreements that are binding in law provided that all of the requirements of the legislative section are met.
Of course, like any legal strategy, there are risks and pitfalls. For example, it is essential that both parties sign the agreement in the absence of any undue or illegitimate influence. This will mean that providing your future spouse with a prenuptial agreement not open to negotiation, at a moment’s notice before the wedding, will not meet the stringent criteria for a validly executed binding financial agreement.
Do you need a prenuptial agreement?
If you answer “yes” to all of the below questions then you should definitely consider getting advice regarding a binding financial agreement. In fact, if you answered “yes” to ANY of the below questions, you should consider contacting a family lawyer for advice on whether drafting a prenuptial agreement is a commercially viable option for you.
- Thinking about marrying your partner?
- Are you a high income earner?
- Do you have superannuation?
- Have you accumulated assets prior to the relationship?
- Do you have children?
- Are you worried about the risk of being labile to pay spousal maintenance on separation?
- Do you want to avoid Court?
Example of enforcement
The Full Court of the Family Court recently considered a similar situation in the matter of Kennedy & Thorne . A 68 year old property developer married a 36 year old bride from overseas. The husband’s lawyers prepared a prenuptial agreement that was signed before the parties married, and a second agreement was signed during the course of the relationship. Three years later the couple separated. The Court held the following:
- the fact that the husband required an agreement before marriage, cannot of itself sustain an allegation of duress;
- the agreements were negotiated by the independent legal representatives of each party, and amendments made during the course of the negotiation; and
- the wife had independent legal advice against entering into the agreement, and decided not to follow the advice.
Ultimately the binding financial agreements were both upheld. This case represents a notable confirmation of the judicial stance in support of Binding Financial Agreements prior to marriage. However, there are also many cases which, all too commonly, exemplify the dangers of a poorly drafted binding financial agreement.
For more information contact us on 8355 9999, and one of our experienced family lawyers will help you decide whether such a path is suitable for you.