Are prenups worth the paper they are written on?

What is a prenup?

The family Law Act provides that you can contract out of its provisions by entering into a binding financial agreement which is often referred to as a prenup.

A binding financial agreement can be made at the start of a relationship, during a relationship or after a relationship ends.

But it’s most common use is to provide a framework for what happens to a party’s property in the event of a relationship breakdown.

Why should I consider a prenup?

Let’s face it, discussing a break-up can be a real mood killer during the romance phase of a relationship, but the reality is that one in three marriages will break down. That doesn’t include how many de facto relationships will also end.

Making provision for what will happen in that event makes good sense. This is particularly the case when older Australians remarry with more substantial assets and concerns as to how their children from early relationships may be impacted by a claim from a new partner.

For many people, providing for what will happen in the event of a relationship breakdown allows them peace of mind and provides reassurance to their children.

If a prenup is properly executed, and not unduly unfair, then the family court cannot make orders about property or partner maintenance.

Are prenuptial agreements legally binding?

For a financial agreement to be valid and binding on the parties, the following requirements must be met:

• it is signed by all parties,
• all parties sought independent legal advice as to the legal effect of the agreement,
• signed statements are provided by independent legal practitioners stating that advice in relation to the agreement was provided to the party, and
• those statements are provided to the other parties.

Is a binding financial agreement bullet-proof?

The short answer is no. There are certain circumstances where the court has the power to overturn the agreement and then the Family Court can hear and determine a family law property application.

In a recent case, a wealthy older man approached his bride-to-be three days before the wedding demanding she sign a prenup or he would not proceed with the wedding.  She had many relatives heading to Australia for the wedding and was really left with no choice. Such behaviour was found to be unconscionable and for that reason the court set aside the agreement.

There are other circumstances such as fraud, suppression of evidence and other reasons why a Court can set aside an agreement, but they are the exception rather than the rule.

So what are the pros and cons?

Pros

• Having a prenup can provide peace of mind particularly for those concerned about children from an earlier relationship.
• A valid prenup agreement protects assets from claims in the family court.
• A prenup allows parties, after proper legal advice, to make up their own mind about how they will divide their assets if their relationship breaks down.
• A prenup can also ease tension between parties about their assets during the relationship.
• Prenups can give parties the confidence to pursue relationships without putting their assets at risk.

Cons

• They can be a real mood killer.
• A prenup can hamper the way couples invest during their relationship
• It can be difficult to trace assets that are disposed of during the course of the relationship.
• They can be unfair.
• They can, in limited circumstances, be set aside.

If you are considering a prenuptial agreement you should certainly seek legal advice as to whether it suits your circumstances.

How can TGB lawyers fixed fee family law team help me?

We offer fixed fee family law services to clients based in Western Australia.

If you would like to discuss prenuptial agreements or any other aspect of separation or how our fixed fee family law service can help you, please visit fixed fee family law or contact a member of our team on (08) 9211 5800 or via email tgbfamilylawperth@tgb.com.au.