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 The Family Law Act 1975 makes provision for couples to make agreements about how their property would be dealt with if their relationship should break down. These agreements, known as Binding Financial Agreements, can be made before and during a marriage, as well as after a couple separates.
Drafting prenuptial agreements is a complex task. It is important that you and your spouse have a clear understanding of how you intend dividing your property and financial resources should your relationship break down.
You need to take into consideration how future changes in life (for example: the birth of a child, serious illness, loss of employment or the receiving of an inheritance) are to be accommodated for.
There are particular legal requirements which need to be adhered to otherwise the agreement may not be legally recognised. You and your spouse must each obtain independent legal advice. Your lawyers must sign a certificate to say that they have given you that advice.
A properly-drafted prenuptial agreement can give you the confidence to embark upon marriage knowing that you and your spouse have taken into consideration how you wish your property to be dealt with should the relationship fail. It is important to note that this is a relatively-new area of law in Australia and there is still some uncertainty about how the Courts will deal with prenuptial agreements should you or your spouse apply to the Courts to set it aside.
Prenuptial or Binding Financial Agreements could be set aside by the Court if:
- The agreement was obtained through fraud. For example if you or your spouse failed to provide proper disclosure about something that is relevant, such as the true nature of your assets.
- If, since the agreement was made, circumstances have arisen to make the agreement impracticable to be carried out.
- If, since the agreement was made, a material change in circumstances occurred such as the birth of a child and as a result the parent caring for the child would suffer hardship if the agreement were allowed to remain in force.
De Facto Couples
Since 1 March 2009 couples recognised under the Family Law Act 1975 to be in a de facto relationship are also able to able to make financial agreements under that Act. Before the 1 March 2009 amendments, de facto couples in New South Wales could enter into a Financial Agreement under the Property (Relationships) Act 1984.
A financial agreement that has been validly entered into before the 1 March 2009 amendments under the Property (Relationships) Act 1984 can be recognised as binding under the Family Law Act 1975. Of concern though, is whether an agreement prepared under the old legislation that does not make arrangements in respect of superannuation and maintenance will remain binding. In the circumstances it may be prudent to enter into a new agreement. You should seek legal advice if you have made an agreement under the Property (Relationships) Act 1984.
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