At Daykin Family Law, we are often contacted by couples asking for advice on the preparation of a prenuptial agreement or ‘prenup’. Prenup is a popular terminology, but actually refers to agreements taken prior to marriage in the USA and other countries. The equivalent of a prenup in Australia is known as a Binding Financial Agreement.
What is a Prenuptial Agreement?
A prenup, or Binding Financial Agreement as it is referred to in Australia, allows married couples (post-nuptial), soon to be married couples (pre-nuptial) and parties in a defacto or same sex relationship, to enter into a legal agreement about their financial affairs in the case of a relationship breakdown.
Binding Financial Agreements were introduced in Australia in 2000 to provide a mechanism for couples who are either contemplating marriage, or are already married to organise their affairs, including what could happen to property, business or how they would be looked after financially following a separation.
Should I get a prenup?
Prenups, or Binding Financial Agreements, are designed to remove uncertainty and avoid the stress of going to court. When done correctly, they can be a very useful tool for financial planning. It is, however, very important to take your time, and use an experienced lawyer to demonstrate that each party has had the opportunity to negotiate and reach a fair decision on the agreement. Agreements done in haste have been known to be challenged by the court.
In a recent case known as Thorne v Kennedy, the High Court overturned a prenup between a young woman and her property developer husband after she was made to sign the agreement the night before her wedding. The judges ruled that the document was effectively signed under duress. Therefore, it’s important that a pre-nuptial agreement is agreed upon by both parties over an adequate period of time. Other circumstances where the court can overturn an agreement is where the agreement would put unnecessary hardship on the spouse, especially where there are children involved.
In sum, pre-nuptial agreements have many benefits when entered into with the right legal advice from a family lawyer. They can protect your property and estate plan, reduce conflicts, clarify special agreements and establish ground rules for future matters. If you’re considering a BFA and would like some advice on whether it’s right for you, contact us today.