What is a Pre-Nuptial Agreement?
A prenuptial agreement, or prenup as they are commonly shortened to, is a legally binding financial agreement created before or during a marriage or start of de-facto relationship commences. In Australia, prenups are often referred to as Financial Agreements, Binding Financial Agreements, or BFAs.
In theory, if the marriage or relationship turns sour, each person’s assets will be safeguarded and there should be no need for costly and stressful court fees to fairly distribute finances and assets.
Do I need a Binding Financial Agreement?
A BFA will note what assets each party brings to the relationship and records what agreement has been made about the couple’s finances should the relationship break down.
Examples of what can be recorded on a binding financial agreement:
- Collections (e.g. classic cars)
- Spousal support
BFAs are often utilised by those with significant asset pools, by those who marry later in life that may have acquired assets previous to the relationship, and by blended families. They can also be used by those who want to minimise costs and avoid disagreements in the event of separation.
A binding financial agreement can be made well before the wedding or start of a de-facto relationship, during the relationship or marriage, and up to before divorce is filed.
Are BFAs legally binding or can they be set aside by the court?
BFAs are legally binding and can protect the assets you’ve worked hard to earn and can avoid court battles and the emotional and finances stress that comes with them.
However, if a BFA is not carefully drafted or properly executed, or if advice has been inaccurate, the Family Court can set it aside.
If this is the case, each party is free to apply to the court for a property or asset settlement like any other separated couple. BFAs are made for a reason, so for this to be set aside by the courts at the time of separation can be devastating.
Common reasons the Court can set a BFA aside include:
- The agreement is obtained under duress, for example under the threat of not continuing with the wedding unless a binding financial agreement is signed
- There is evidence of non-disclosure of assets when the BFA was signed
- Significant changes to either party’s circumstance (including circumstances relating to a child) where continuing with the agreement would be impractical or result in hardship for the child or carer
- The agreement is simply not fair to one or more parties
Positives and negatives of binding financial agreements
- Peace of mind that assets of both parties are fairly protected
- Protection of financial inheritances of children from previous relationships
- Minimising costs of lengthy court battles
- Clear intentions which can reduce worry and confusion
- Not always enforceable and can be set aside by the Family Court
- Will often be skewed dramatically in one party’s favour
- Can be construed as the marriage is entered into with the view of separation or with a lack of trust
- You may void what you would otherwise be entitled to by law
How can I get a BFA in NSW?
BFAs are complex contracts that require specialists in Family Law to advise and ensure a contract is watertight and legally binding. An inexperienced lawyer may not have the legal expertise in Family Law and binding financial agreements to ensure the agreement is not set aside at the time you need it most.
Experts in Family Law at Taylor & Scott are well versed in all aspects of BFAs, from drafting the document to terminating existing BFAs. We liaise with relevant lawyers for added security and peace of mind to our clients. You don’t want to find out your binding financial agreement is able to be set aside by the Courts when you are going through an already emotional, tiring and stressful separation.
If you need expert advice on Family Law and Binding Financial Agreements, you can contact our team of family lawyers on 1800 600 664, or you can complete the contact form on this page.
At Taylor & Scott, We Care For You.
Published: 15 November 2018