Binding Financial Agreements
A prenuptial agreement or ‘prenup’ as otherwise known, is an agreement between couples about how their financials will be divided if the relationship breaks down in the future. Even though prenuptial agreements are a highly emotive subject, it is still a sensible step to protect assets that you have acquired, prior to the relationship, or that you may acquire in the future, for example from an inheritance.
What is a prenuptial agreement?
A prenuptial agreement occurs when two people are planning to get married or planning to enter a de facto relationship.
These agreements set out how assets and debts will be divided, in the event of a separation.
In Australia, these agreements are also called Binding Financial Agreements, when they are created during the relationship or even after separation.
Why should I get a prenuptial agreement?
If the following applies to you or your partner, talking about a prenuptial agreement would be valuable.
- Owning assets before going into a relationship
- Children from a previous marriage or partner
- Second or third marriages
- Business ownership
- Possibility of inheriting money or property
What are the benefits of a prenuptial agreement?
There are many benefits of creating a prenuptial agreement. Such as:
- Avoids arguments: eliminates conflicts over assets and financials if the relationship dissolves
- Speed: It can speed up the separation and divorce process and make it less acrimonious
- Legal and enforceable: helps formalise a mutually agreed financial property settlement, which a court of law recognises.
- Security: gives peace of mind for both parties to move forward in the relationship and plan for the future with confidence
Are prenuptial agreements legally binding?
However, there are exceptions. Each person much enter the prenuptial agreements knowingly and without any coercion, duress or fraud.
One of the most important aspects of a Prenuptial Agreement is obtaining independent legal advice.
According to the Family Law Act, for a Prenuptial Agreement (or Binding Financial Agreement) to be legally enforceable, there must be written confirmation that the people involved, have been given appropriate advice by their lawyer. This is usually in a form of a signed Certificate of Independent Advice.
Challenging a Prenuptial Agreement or Binding Financial Agreement
There are a number of reasons that a Prenup or Binding Financial Agreement may be challenged. Such as:
- Technicality: If the Agreement does not comply with the technical requirements of the Family Law Act
- Not obtaining legal advice: If you or your partner did not obtain proper independent legal advice before signing the Agreement
- Coercion or duress: Where one person did not sign the agreement voluntarily
- Fraudulent behaviour: If a person failed to give full disclose of their financials and assets, prior to signing, this can be a reason to challenge the Agreement.
If you are considering a Prenuptial Agreement or Binding Financial Agreement and would like independent, detailed advice, our experienced lawyers can help you achieve a cost efficient result.
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Would you like to know more?Contact our family law team on 1300 424 452 to receive personalised advice about your case.