Your Guide to Prenup & Postnup Agreements in Australia.
Did you know that 60% of 2nd marriages end in divorce?
Blended families are becoming more and more common.
A ‘prenup’ or ‘Financial Agreement in Contemplation of Co-habitation or marriage’ is a way for you to protect and preserve your contribution and your children in the event of a separation or divorce.
Long gone are the days when prenuptial agreements are for the wealthy. It’s not uncommon for couples to contribute different amounts to their relationship or re-partner.
Regardless of your wealth, you may have personal assets or investments that you want to protect.
That’s where a ‘Pre-nup’ or ‘post-nup’ comes in. Is Simple Separation right for you and your partner? Find out below by taking our quiz.
What is a Prenup?
A Prenup is a financial agreement that is drawn up between a couple who are contemplating marriage or living together to protect one or both couple’s pre-marital assets from a family law claim should the couple separate.
In recent years, the Prenuptial Agreement or Financial Agreement between couples has become a lot more common (and for good reason). While the word ‘prenuptial’ leans towards an agreement prior to marriage, it can be drawn up anytime in a relationship.
The jurisdiction of the court doesn’t apply once a financial agreement is made. However, in some circumstances the Court does retain its power to ‘set aside’ or overturn such an agreement so legal advice is always necessary.
What is included in a Prenup?
To make a Prenup binding both parties need to disclose all of their assets, liabilities, income and financial resources. They then need to specify what assets they want to quarantine, meaning those assets will not be considered in the asset pool if and when the parties separate.
Both parties have independent legal advice, so they are aware of what they are entering into and the advantages and disadvantages of such an agreement. They both need to sign the agreement for it to be valid.
Included in the prenup is a separation declaration that remains unsigned unless and until the couple separate. On separation, the declaration is signed by either party and the prenup becomes in force.
What are the key benefits?
01
Certainty
A Prenup may define premarital assets, liabilities, and finances.
02
Protection.
It will help to protect your assets, your children, and your future.
03
Clarity
A Prenup is likely to minimise animosity during divorce and separation, making divorce and separation less complicated.
Above all, a Prenup can provide peace of mind.
Research by Canstar shows only 6% of married couples in Australia currently have a Prenuptial Agreement.
However, Caroline Mckenzie from McKenzie Legal says that with more couples marrying later in life with a bigger asset pool and may have children from a previous relationship, it makes sense for them to protect their assets and their children should a relationship fail. She says the Prenup gives couples more control over how a separation would be handled.
“By making financial arrangements the couple are saying, ‘we do not want the Family Law Act to apply to our property split if we separate. Instead, we want the property split to be according to the terms set out in our agreement.” says Caroline.
When can a Prenup be drawn up?
A Prenuptial Agreement is drawn up before marriage or co-habitation.
After marriage or co-habitation, a financial agreement can still be drawn up and this may be referred to as a ‘post-nup’ and just like a prenup becomes effective when a separation declaration is signed by either of the parties.
Can the court overturn a prenuptial and postnuptial agreement?
Yes, it can be overturned for the following reasons:
If there has not been adequate legal advice
There has been fraud (such as non-disclosure of a material matter)
An intention to defeat or reckless disregard of the interests of a creditor
Any duress, undue influence or unconscionable conduct (taking advantage of any weakness of a party);
Or, circumstances have arisen making it impracticable for the Agreement to be carried out;
Or, where the care arrangements for a child of the parties have materially changed so that a party will suffer hardship if the Agreement is not set aside.