Do you mean “prenup”?
Many of us are familiar with the use of the term “prenup”, however in Australia a prenuptial agreement is referred by the Family Law Act as a Binding Financial Agreement. You may also have heard of them referred to as “Separation Agreements”, “Cohabitation Agreements” and “Divorce Agreements”.
A Binding Financial Agreement can be made by a couple who are intending to get married or cohabit in a de facto relationship and records what assets and debts each person brings into the relationship.
By making Binding Financial Agreement, a couple is agreeing in advance what will happen in the event that the relationship breaks down and a separation or divorce occurs, and how their finances will be divided in a property settlement. Essentially, by making a Binding Financial Agreement, a couple is contracting out of the right they would otherwise have to ask the Family Courts to decide upon the division of their property after they separate.
Will my Binding Financial Agreement actually be binding?
No. For a number of reasons Binding Financial Agreements are increasingly being overturned by the Family Court. Common reasons are:
- Non-disclosure – If one of the parties does not disclose the full extent and value of their assets at the time when the Binding Financial Agreement was drafted and signed it may be set aside.
- Unreasonable Pressure – If one of the parties unreasonably pressures or coerces the other party into signing the agreement or makes it a condition of a wedding going ahead it may be set aside.
- Unfairness – If an agreement is not just and equitable it may be set aside.
- Children – If an agreement does not provide for circumstances relevant to children or future children it may be set aside.
Do I need one?
To discuss if a Binding Financial Agreement is right for you, or if you would like us to look at an agreement you have entered into, please contact us so that we can have a discussion about your individual situation.