A “prenup”, otherwise known as a Financial Agreement, is a contract signed between two people prior to their wedding, specifying how their property will be divided in case of separation. There are other types of Financial Agreements under the Family Law Act 1975 (Cth) not just those which can be entered into before marriage, but also during marriage or before or during a de facto relationship.
The effect of a financial agreement, if binding, will exclude the jurisdiction of the Federal Circuit and Family Court of Australia from making decisions about the division of your assets and future maintenance in case of separation.
For a Financial Agreement to be legally binding, it must meet the following technical requirements:
- Both parties must sign it.
- Both parties must get independent legal advice before signing, and their lawyers must confirm this with a statement.
- The agreement has not been terminated or set aside by the Court.
Remember, both you and your partner should get separate legal advice about the pros and cons of entering a Financial Agreement and how the agreement affects your rights. Your behaviour during the negotiations and at the time of signing the agreement is also crucial to prevent the agreement from being set aside.
Even if you meet the technical requirements and get independent legal advice, a financial agreement might still be set aside in certain situations. For example, where there is:
- Non-disclosure: Both parties must honestly share their financial positions, including assets and debts, financial resources at the time of making the agreement.
- Duress or undue influence: One party can’t force, put pressure on, or manipulate the other into signing.
- Care and welfare of children: If a party would suffer hardship as a result of caring responsibilities for a child born after signing the agreement, the agreement may also be set aside.
Please be aware that the above is not an exhaustive list, and should only be used as a guide.
If a financial agreement is set aside, the Court can step in and make decisions about the alteration of the property rights between the parties. If this occurs, it could lead to an expensive legal battle.
Accordingly, if you are interested in having a Financial Agreement drafted, please contact one of our trusted lawyers at wedolaw.