Are Prenuptial Agreements Binding?
Yes. Since December 2000 parties who are to be married are able to enter into Prenuptial Agreements (known as Financial Agreements) that provide for how assets will be divided if the marriage later breaks down.
Prenuptial Agreements are enforceable in Australia if they follow and adhere to the very strict legal requirements of the Law.
What can Prenuptial Agreements cover?
Prenuptial Agreements can deal with property division and also spouse maintenance. They can take into account anticipated changes such as children being born and the length of a marriage, by providing for different asset splits, depending on how long the marriage lasts, how big the asset pool is, or how many children are born to a couple.
What if we are already Married. Can we enter into a Financial Agreement now?
Yes. Couples who are already married may enter into a binding Financial Agreement that provides for how assets are to be divided if the marriage later breaks down.
Can De Facto Couples make Binding Financial Agreements about what happens if they Separate?
Yes. Whilst de facto couples in NSW are not governed by the Family Law Act, there is State law in NSW that enables them to enter into binding documents called Domestic Relationship Agreements, that have the same effect as Prenuptial Agreements do for married couples.
Can Prenuptial Agreements and Financial Agreements be set aside?
Yes. The Family Court has powers to set aside Prenuptial Agreements where either they do not comply with the Family Law Act or there has been some fraud, undue influence or non-disclosure at the time the Agreement was made.
The Court can also set aside a Prenuptial Agreement if there is a material change in the welfare of the children and it would cause a hardship to enforce the strict terms of a Prenuptial Agreement. For example, a Prenuptial Agreement might provide that on separation, a wife gets no assets and the husband keeps all assets in his name. If, at separation, the wife is caring for several children and has no income or assets, the Court is likely to set aside the Prenuptial Agreement as causing hardship to the wife and children.
If a Prenuptial Agreement is set aside, the Court’s general powers to alter property interests and order spouse maintenance then applies. This could obviously result in Orders being made, far less favourable to a party than what the Prenuptial Agreement provided for. All existing Binding Financial Agreements (pre-nuptial agreements) should be reviewed in light of such recent decisions so as to ensure that they are indeed binding.
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