Prenuptial agreements not just for Hollywood wives

When the words ‘prenuptial agreement’ get mentioned, most people start humming Kanye West’s Gold Digger or envisioning the latest WAG brigade from whichever season of Housewives you happen to be watching at the time.

These don’t necessarily paint a pretty picture of prenups: “It’s something that you need to have / ‘Cause when she leave your house, she gone leave with half”. Nobody goes into a relationship or a marriage assuming the worst, but isn’t it better to know that your assets and contributions are protected if anything should go awry? I’m certain Kris Jenner made sure Kim Kardashian had one, and it wasn’t for Kanye’s benefit or the advice of his song.

In Australia, prenuptial agreements are actually called Financial Agreements. A Financial Agreement determines how the assets will be split or managed between the parties in the event that the relationship ends. Financial Agreements can be made before, during or after the start of a de facto relationship or marriage. Usually one or both spouses are seeking to protect significant assets (such as property, super, savings or shares) owned prior to the start of the relationship from claims made by the other spouse at the end of a relationship.

There are many benefits to entering into a Financial Agreement. These include:

• Certainty of the outcome should your relationship end.

• Protection of a party’s assets without Court consent.

• The reduced cost of preparing a financial agreement compared to that of finalising property orders after separation or divorce.

• Assets of sentimental value can be quarantined from the pool of assets.

• Both spouses know where they legally stand upon entering into the agreement.

Entering into Financial Agreement means that you are contracting out the laws contained in the Family Law Act for the criteria and manner of asset division between the parties if the relationship ends. Both parties are required to make full and frank disclosure of their financial position when entering into the contract; that is, all assets, liabilities and any other financial resources that would be taken into consideration if the matter were to go to court in the event the relationship broke down. Not disclosing all financial information prior to signing the agreement exposes the risk that the agreement may be set aside by the Family Law Court.

It is a legal requirement of a Financial Agreement that both parties to the agreement seek independent legal advice from a family law solicitor before signing off on the final document. The agreement is only considered by the Family Law Court if both parties have received certification from a family law solicitor confirming that they have received independent legal advice.

A Financial Agreement may be set aside by the Family Law Court in the following circumstances:

• One of the parties did not disclose all financial assets, liabilities or otherwise at the time the agreement was entered into.

• Circumstances change during the relationship that make it impossible for the agreement to be carried out.

• If the agreement was entered to conduct fraud.

•If a child is born into the relationship or another significant material change occurs which would significantly impact the welfare of one of the parties.

• If one of the parties was coerced into signing the initial agreement.

Because a Financial Agreement is a private agreement between parties, the Family Law Court maintains the power to overturn the Financial Agreement if it does not comply with the law. Both parties signing a Financial Agreement must understand that there is the possibility that the other spouse may challenge the Financial Agreement at the end of the relationship and consequently the Financial Agreement may be overturned by the Family Court.

Preparation of a Financial Agreement

It is imperative that you obtain the right legal advice when entering into an agreement and ensure it has been correctly drafted under the Family Law Act. At Grace Law, we can advise and assist you with the preparation of a Financial Agreement at any stage of your de facto relationship or marriage. Our professional team of family law solicitors will explain each step of the process, and provide information on how your assets may be divided by the Family Law Court if you do not have a Financial Agreement in place.

If you already have an existing Financial Agreement and are concerned or dissatisfied with the terms of this agreement, our team can advise on the appropriate course of action to have the agreement amended or set aside by the Family Law Court.

We can also offer you independent legal advice about the terms and effect of any financial agreement you are considering entering into. Contact Grace Law for an appointment with our experienced family law team today.

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