What is a prenuptial agreement?
Prenuptial agreements, also called binding financial agreements, are becoming more common in Australia. There are advantages and disadvantages to having such an agreement but many couples are entering this type of legal agreement. Having a prenuptial agreement can save you both in legal and emotional costs should the relationship end.
A prenuptial agreement can tell you a lot about a couple. They’re not just for celebrities or the really wealthy. Binding financial agreements, including prenups, have been a part of the Australian legal landscape since late 2000, following changes to the Family Law Act. Couples intending to marry can enter into prenuptial agreements setting out how their assets will be divided if their marriage breaks down. The requirements of such agreements are quite strict, including that both parties obtain their own independent legal advice. You can not enter into this type of Agreement without the help of a solicitor.
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Some Good Reasons for Having a Prenuptial Agreement
The Australian Bureau of Statistics tells us that the median age of divorce in Australia for men is 45 and for females is 42.5 and the average length of marriage is 12 years before divorce. With such sobering figures, prenups are not a silly idea. Phillipa Kingswell, Accredited Specialist in Family Law at Mitchells Solicitors, says that to help protect against a messy relationship end from a financial perspective is “a binding financial agreement, or prenup as they are more commonly known”.
It is an agreement to determine how the assets of a relationship will be divided should the relationship break down and can cover issues such as ongoing maintenance and how assets will be split following a partner’s death”. Kingswell says that her clients typically put binding financial agreements in place when:
• A person has significantly more assets than their partner at the start of the relationship;
• A person has received, or expects to receive, a large inheritance
• Children from previous relationships are involved.
Phillipa Kingswell adds: “The best way to approach prenups is to talk openly about it when the relationship starts getting serious.”
She says don’t leave it until only a few days before the wedding and recommends planning ahead. “Talk about the assets that you both have and if things happen, the last thing anyone wants is the stress and costs of lawyers and court to split assets,” Kingswell says.
Kingswell advises her clients to get binding financial agreements in place but notes that “a court can rip up the agreement if it is not fair and reasonable. It’s not like in the USA and it’s not a be all and end all document”. Prenuptial agreements have been thrown out in court if they’re found to be unfair and unreasonable.
In regard to other benefits of prenups, Kingswell adds “at the very least it will detail the assets that each party brought into the relationship which can reduce legal costs upon divorce as a lot of time can be spent in court arguing about who brought what into the relationship”.
Some Prenups Are Unenforceable
But it seems that people are putting a whole lot more into prenups in Australia than they used to. Last year there was a case in the Family Court in Sydney where a man had handed his future wife an agreement he wanted her to sign, including terms about her weight and her not “leaving him for a younger man”. Another tactic employed is one partner springing a sudden prenuptial agreement on their unsuspecting fiance days before their wedding, demanding it be signed or the wedding is off. The family court frowns upon such behaviour and will often rule that the agreement in question will not be enforced.
Phillipa Kingswell says that prenuptial agreements are “as individual as the clients”. She says, “In some cases you have sunset clauses where the prenup doesn’t apply after a certain number of years; in other cases you’ve got changing circumstances for having children.”
Occasionally, some unusual provisions are included in the prenuptial agreement. One example is one clause imposing a “monetary fine if one party had been unfaithful”. The fine was reduced “if they confessed within 48 hours”. It might be good in theory, but legally speaking, it’s completely unenforceable. A court is not going to do anything about that because it is against public policy.
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Another example is a prenuptial agreement with the provision that the couple were not going to have children and if the woman fell pregnant she had to have an abortion. Again, it’s completely unenforceable.
Other unenforceable provisions in prenuptial agreements are classed as lifestyle clauses, including provisions about weight gain, social appearance, and sexual performance . They simply don’t have any legal consequence here in Australia.
Prenuptial Agreements Are Not Limited To Before a Wedding
You and your partner can sign a binding financial agreement at any time before or after your’re married and at anytime you’re in a de facto relationship. You might consider this if the relationship is not going well, where addictions or compulsive behaviour have become apparent or if one partner is expecting a large inheritance, for example.
If you’re wondering whether it’s a good idea to have a prenuptial agreement, then contact us today. These agreements can be made before or after you’re married and if you’re in a de facto relationship. We offer a free, 10-minute phone consultation with one of our friendly and competent family lawyers.