Why make a pre-nuptial agreement?

Last updated: December 2020 | 4 min read

What is a pre-nuptial agreement?

A pre-nuptial agreement (a "prenup") 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 or separation. Assets considered in the document might include: wealth, property, income, inheritance and debts; acquired individually or jointly; and before and during the marriage.

A pre-nuptial agreement signed by a cohabiting couple who do not marry (also known as a de facto couple) is legally binding in the courts. A pre-nuptial agreement can also be binding in a marriage given certain circumstances though there is nothing stopping the parties from challenging this or being set aside by the Family Law Court.

You may wish to read our article on Pre-nuptial agreements: are they legal and enforceable in Australia?

Why pre-nuptial agreements are gaining popularity?

No-one goes into a marriage or civil partnership expecting it to end, but having a pre-nuptial agreement can greatly simplify separation proceedings if they do happen, and reduce stress and unrealistic expectations.

Having such an agreement is also a way of keeping your real reasons for being together separate from financial matters which otherwise might introduce doubt into the relationship. You can be sure that neither of you are thinking about the other's money.

Are pre-nuptial agreements just for the wealthy?

Not at all. Anyone can make an agreement, whatever their current wealth. You may expect to become wealthy in the future (for example if you marry while your new business is just starting), or you might just have assets (such as family heirlooms) that you want to ensure remain with you if you do split up.

Reasons for writing a pre-nuptial agreement

All assets within a marriage or civil partnership are regarded under the law as matrimonial assets, and in the event of a divorce the court will decide on how to divide them up fairly if there is a dispute.

If you wish to protect certain assets from being divided up beyond your control, a pre-nuptial agreement, which is entered into freely and with full knowledge of each others' assets will most likely be considered by the court.

A pre-nuptial agreement may help you protect your assets in the following circumstances:

  • if you are remarrying, you may wish to protect the settlements you received from your previous marriage
  • if you have children or dependants outside the marriage, you may wish to protect certain assets for their benefit
  • you or your partner may have debts that you don't want to inflict on the other
  • you may have a business that you don't want to be considered as a matrimonial asset
  • you may wish to protect your estate or specific family heirlooms
  • you may have overseas wealth you wish to protect

If you are much wealthier than your partner, or have much higher earnings, you may wish to preserve this if you become divorced. It is not unusual for assets to be split evenly by the courts, so a pre-nuptial agreement will increase the chance that you get to keep more than 50%.

On the other hand, if you are much less wealthy than your partner you might want to make sure you have security if you get divorced, particularly if you feel your non-financial contributions to the marriage might not be recognized.

Useful documents

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.

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