Pre-nuptial agreements - are they legal and enforceable in Australia?
What is a pre-nuptial agreement?
A pre-nuptial agreement is a document created before marriage or civil partnership in which a couple sets out how they wish their assets to be divided in the event of divorce. Assets include: wealth, property, income, inheritance and debts; acquired individually or jointly; before or during the marriage.
Pre-Nuptial agreements as under the Family Law Act 1975:
By the law of this Act there are three main types of financial agreements which are binding: agreements made before marriage, during marriage and after separation. An agreement made before marriage is commonly known as a pre-nuptial agreement and it can be made with respect to the matters of:
- Property settlements and financial resources division in case of marriage break down
- The maintenance of either one of the spouse during the marriage and/or after dissolution of marriage
- any incidental, ancillary or other matters to those above.
The FLA provides no definition or examples of these terms. An ancillary or incidental matter is one which has a sufficient connection with the subject of property division or spousal maintenance during marriage and/or after dissolution
There are three conditions which qualify a document to be a financial agreement:
- It is in writing
- It is made in contemplation of the parties entering into a marriage
- It is made pertaining to the distribution of property, financial resources, spousal maintenance and incidental or ancillary matters in the event of a marriage breakdown.
Is my agreement permanent?
The agreement will be binding (admissible in court as an authority) if:
- The agreement is signed by both parties
- The agreement specifies that each spouse sought independent legal advice and are well aware to the effect of the agreement. Both parties should be aware of their rights and seek for solicitor’s advice as to the advantages and disadvantages of making that agreement.
- The above point should be available as evidence in the form of an annexure (attachment) to the agreement containing a certificate signed by the legal practitioner stating that such advice on the above matters was provided.
- The agreement has not been terminated or set aside by a court of law
- When signing, the original agreement is given to one of the parties and a copy is given to the other
- A separation declaration is also to be made. The declaration is signed by one of the parties and must state that the parties have separated and are living separately at the time the declaration is made and in that parties' opinion, there is no reasonable likelihood of cohabitation being resumed.
If these requirements are fulfilled, the court may make any necessary orders for the enforcement of the financial agreement if the need arises.
Can this binding agreement still be set aside?
Your lawyer can never provide a guarantee that an agreement (though binding) will not be set aside by the Family Court. A spouse can still challenge the agreement even if it is binding. The main grounds under which the Court may set aside such a binding agreement are given in section 90K of the Family Law Act. A brief preview of these grounds has been provided below:
- In case of fraud.
- Seeking to defraud a creditor to the party.
- Void due to requirements for a binding agreement not being fulfilled;
- A material change in circumstances
- in unconscionable conduct
It is usually predicted the "material change" ground most probably forms the basis of many future applications to the Court to have agreements set aside. This should be avoided by adding a specific clause for these change in circumstances.
The court can nevertheless make an order for spousal maintenance (despite what is in the agreement) if the court is satisfied that, taking into account the terms and effect of the agreement, a party was unable to support themselves without a pension.
If you think a pre-nuptial agreement is for you, you might be interested in using our template. See our Pre-nuptial agreement for more details.
You might also be interested in reading our article on Why make a pre-nuptial agreement?
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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