Before your big day comes, it is important to straighten out certain financial topics for the benefit of everyone involved, including a prenuptial financial agreement.
Now, you may dislike prenups and any type of prenuptial financial agreement due to what you’ve seen in the media. You probably think that prenuptial agreements are a means for the “richer” spouse to protect their money and assets after a divorce.
And that’s not entirely untrue. Prenuptial financial agreements do help to clarify financial matters, but that’s not all. They also help you and your partner build trust right from the start of your marriage, opening the lines of communication.
What is a Prenuptial Agreement?
A prenuptial agreement is also known as Binding Financial Agreement under Australian Family Law. It is a legal agreement between a couple stating how their assets and properties will be shared if the relationship ever comes to an end.
This binding financial agreement prenup typically provides a list of all the assets and debts that each person owns. As such, it requires both partners to fully disclose all the properties and money they own before they get married.
In addition to that, the prenup specifies the property rights each person will have after the marriage. It provides for how the couple would divide their properties and money in the event of divorce or death.
Are Prenuptial Agreements Binding in Australia?
Prenuptial agreements are valid and binding in Australia so long as it meets specific requirements. This is where hiring a qualified and experienced prenuptial agreement lawyer in Australia becomes essential. Financial agreement lawyers would create a prenup that would hold up in Court.
To be binding, a prenuptial financial agreement must protect both spouses and must have been entered into with a complete disclosure of all the assets the couple owns. Then, it must also be signed and executed properly in accordance with Australian law.
Therefore, a prenuptial agreement in Australia may not be binding under the following circumstances:
Separate Lawyers:Before entering into a prenuptial agreement, both spouses should have different lawyers. If they use the same lawyer, the Court may assume unfairness and may not enforce the prenup.
Duress/Coercion:If any spouse uses force or any kind of pressure to get the other person to sign, the prenup may not hold up in Court. The same goes for when one spouse fails to give the other person enough time to go through and consider the prenuptial agreement.
Fraud:Both spouses must disclose all their assets honestly in a prenuptial agreement. If one or both spouses hide their assets, the Court may not enforce the prenup.
Inequitable and Unfair:The Court may invalidate a prenup if it favours one spouse unfairly. For instance, if the binding financial agreement leaves the spouse with nothing.
Consult with an Australian prenup lawyer to avoid any of these situations that can invalidate your prenuptial financial agreement. A prenuptial agreement lawyer will advise you on the dos and don’ts of prenuptial financial agreements and can help you draw up one that is legal and binding.
Prenups: Pros and Cons
Like many other things in life, prenups have their advantages and disadvantages. Let’s take a look at some of each.
Finality:A prenuptial agreement determines how the property and assets of the couple will be divided in a manner such that the Family Court cannot alter or negate the agreement. As such, any potential conflict is dealt with by the agreement itself.
Certainty:With a prenup, a couple can set out how their assets will be divided if they separate in the future.
Security:A prenup provides peace of mind concerning how to carry out future arrangements. This means that the couple can make better plans without worrying about what could happen in the future.
Unfair:One spouse can use a prenup as a way to exert financial control over the other. Currently, Australian law makes prenups binding even if it indicates a “bad bargain” for one spouse. That’s why it is important to always consult a prenup lawyer before signing a prenuptial agreement.
No protection:A binding financial agreement prenup, when properly drawn, ousts the jurisdiction of the Family Court. Unfortunately, this means that the principles of the family law, which are created to promote fair outcomes as it concerns financial settlement after the breakdown of the marriage, will be inoperational.
Jurisdiction:Australian law governs prenups ratified in Australia. As such, it may be difficult to implement if the couple has assets overseas.
Can You Get a Prenup After You Get Married?
Technically, you cannot get a prenuptial financial agreement after getting married. By definition, “pre” means before and “nuptial” means “marriage” or “wedding”. As such, a prenuptial agreement is an agreement signed before marriage. So, no, you cannot get a prenup after you get married, only before.
But, all hope is not lost. If you’re married already and wish you had signed a prenup, it’s not too late. You can sign a postnuptial agreement, also called a postnup. This financial agreement achieves the same goals as a prenup. It determines how the couple’s properties will be owned and managed during the course of their marriage and how these properties will be divided if the marriage comes to an end.
Whether entering into a prenup or postnup, it is essential that you consult with a prenup lawyer to guide you through the process.
Can You Get a Prenup Without Being Married?
Since prenups are binding financial agreements entered into before marriage, a couple cannot get a prenuptial financial agreement if they do not intend to get married. However, a couple who live together (i.e. people in a de facto relationship) can enter into a cohabitation agreement.
A cohabitation agreement is another binding financial agreement that sets out the rights and responsibilities of the couple if they separate. As such, it is essentially the prenup or postnup for unmarried couples.
It typically provides for how the couple will divide their assets and debts. It also sets out the management of their daily finances while living together, stating how much each party contributes to mortgage/rent, property taxes, utilities, insurance and repairs.
Ideally, this type of binding financial agreement should be signed before the couple begins living together. However, they can enter into it at any point in the relationship. And if specified in the contract, a cohabitation agreement can turn into a prenup if the couple decides to get married.
Like prenuptial agreements, cohabitation agreements are binding and enforceable in Court. So, before entering into one, make sure to consult with a financial agreement lawyer. Financial agreement lawyers are skilled at drawing up cohabitation agreements that can work for both you and your partner.
Contact a Prenuptial Agreement Lawyer
The division of financial assets and liabilities, rights and responsibilities before getting married is not a matter to be taken lightly. Seeing as financial agreements are binding and enforceable, it is essential to have an experienced prenup lawyer by your side every step of the way, from its creation to its execution.
At Clarity Lawyers, our experienced prenuptial agreement lawyers are skilled in creating and providing advice with respect to every kind of financial agreement, including prenups. Contact us today.