Thursday 19 June 2014

Pre Nuptial Agreement - to have one or not to have one?

Is a pre nuptial agreement for you?

Thanks to the popular press reporting on the rich and famous, we all know what a pre-nuptial agreement is, more or less. A pre-nuptial agreement relates to a couple agreeing before they enter into a relationship how they are going to divide up the assets should the relationship break down. Some might argue this level of mistrust is not a good start to a relationship, whereas others, usually those with more money, simply see it as a way of ensuring their financial future.

In Australia these agreements are referred to as binding financial agreements (BFA). You can have a binding financial agreement before getting married, before starting to live together or when separated. It is critical that the BFA correctly identifies pursuant to which section the agreement is drafted. Not getting the section right can already lead to a court deciding the agreement is not valid.

When should you have a BFA

Be it over a glass of champagne, a romantic candlelit dinner or some other exquisite setting, the conversation about wanting your so called loved one to sign a BFA can be a bit of a love dampener. It is difficult to imagine how the subject could be broached delicately and tactfully.

‘Darling, you know how you are going to move into my million dollar mansion on Monday?’ He/she says caressing the back of the neck of the loved one. ‘Well would you mind just signing your rights away?’

All jokes aside, a BFA may be beneficial in the following situations:
1.     Both parties have been previously married/in a relationship and wish to protect their assets before merging their lives with another person.
2.     Both of you like the idea of setting out before hand how any property should be divided if it does not work out.
3.     One of you has children from a previous relationship and wants to make sure assets are protected for them.
4.     One party has a lot more assets than the other and wants to be sure both parties know what is to happen when the relationship breaks down.


What if I don’t sign the BFA?

It may be that the new love of your life will simply end the relationship if you refuse to sign the agreement. As the law stands the agreement will only be binding if both of you have received independent legal advice as to the advantages and disadvantages of the agreement prior to signing and you will need to sign the agreement voluntarily.

The conversation with respect to not signing the agreement will no doubt be as difficult as the one about signing the agreement. Love and relationships are about trust and faith; a BFA may spoil those aspects of a relationship, whereas others like the idea of knowing what the future holds.

Other options

There is no other option for setting out what is to happen with property before marrying or living together than a BFA. It may be that if you do not sign the agreement, the magic will be gone from the relationship and you find yourself stranded at the altar.

If you have separated and are confronted with a BFA you do have the option of what is known in legal terms as application for consent orders and minute of order.


The above link will provide you with information on this type of agreement.

Remember that whatever agreement you sign it will need to be done freely and without any form of coercion by the other party. An agreement that is signed after much pressure has been applied, may ultimately not be a binding agreement.




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