As family lawyers in Perth, we often get the question “are prenuptial agreements binding in Australia?”.
So we’ve put together a concise guide to prenuptial agreements – called Binding Financial Agreements in Australia – and whether they are legally binding in Australia.
Are Prenuptial Agreements Binding In Australia?
What is a prenuptial agreement?
A prenuptial agreement is a term often used internationally for a written contract between two people about to enter into a marriage or a de facto relationship, setting out the terms of how their finances will be shared in the event of a breakdown in their relationship such as a separation or divorce.
Do you get prenuptial agreements in Australia?
A prenuptial agreement is an American term, but in Australia it is referred to as a Binding Financial Agreement (BFA). Find out more about Binding Financial Agreements here.
Do you need a binding financial agreement?
You are not legally obliged to have a Binding Financial Agreement. They are often seen as being “unromantic”, as some couples, especially younger, may feel uncomfortable entering a relationship by agreeing on the terms of its potential breakdown. Some older couples perhaps getting married for the second time, may be more comfortable setting one up, as they may have had some unpleasant experience from a previous divorce.
The benefits of having a BFA, are however, invaluable to both parties in the event of a breakdown in any marriage or relationship.
Firstly, they will save you time, money and all the unnecessary stress that comes with every separation, and provide both parties peace of mind and security that your assets will be split exactly as you want them to be, and not leaving it up to a Judge to decide what’s best for you, or arguing about who should get what at the time. By minimising the level of conflict, it also paves the way for a more amicable post-divorce relationship. This is crucial when you share children.
Read our blog to help you decide if you need a Binding Financial Agreement.
What does a binding financial agreement cover?
A BFA may cover virtually everything you want it to cover to suit your individual needs. It can cover the division of assets, properties, businesses, cash, investments, superannuation, inheritances, maintenance and also debt. Couples may include any specific term they agree upon, such as excluding certain assets from being shared. This often applies to individual assets acquired prior to the divorce or relationship, bearing in mind that it must be agreed upon by both parties.
Future possibilities such as purchases, acquisitions and children’s needs, including those from previous marriages, should also be considered when drawing up a BFA. One example is that if a couple have children at a later stage and no provisions were made in the BFA for children, the agreement may end up not being legally binding. The Family Court can set aside a BFA in certain situations, including a change in circumstances.
To safeguard against any unforeseen future circumstances, such as having children, change in earnings or financial situation, windfall, or health condition, it is best to keep the agreement current by revising and updating the terms, as your circumstances change.
When should you make a binding financial agreement?
A BFA can be drawn up at any stage of the marriage or relationship – before, during, or even after the relationship has ended. They should however be made as early as possible before entering into a marriage or de facto relationship, giving you peace of mind from the very start.
Are prenuptial agreements binding in Australia?
Prenuptial agreements, or Binding Financial Agreements, are most certainly binding in Australia – but they have to be done properly and must comply with all the requirements of Australian Family Law.
You have probably gathered by now that drawing up such an important document can be a fairly complicated affair that requires legal assistance. That is why, one of the fundamental conditions of the Act, requires both parties to receive professional legal advice before signing the agreement. Your lawyers will provide a certificate of advice, which will form part of the overall agreement.
Parties are free choose terms that suit their own personal circumstances, and the Courts do not have to “weigh in” as to whether the agreement is just and equitable.
Can a binding financial agreement be set aside?
They certainly can, and in recent times, many have been thrown out of Court, for failure to comply with certain conditions. Below are some of the reasons a BFA can be set aside.
- Either party not having received legal advice.
- Signing the agreement under duress.
- Failure to disclose or undervalue any asset or business interest.
- If circumstances have changed considerably, making the agreement impractical or unjust.
- If, after signing the agreement either party has acted in an unconscionable manner.
- If either party has entered the agreement with the intention to defraud a third party.
If you’re researching prenuptial agreements in Australia and are considering drawing one up for your relationship, speak to our team of Perth family lawyers about getting a Binding Financial Agreement.
We can help you create a BFA that is fair and clear so that should you ever need to use it, it’s ready to protect both you and your spouse.
Book your free 15-minute information call with our team today and get started.