A prenuptial agreement is a binding financial agreement between a couple (or two ‘domestic partners’) that explains the state of financial arrangements prior to a relationship or marriage. These agreements are for before, during, and after a relationship.
The documents drafted up bind the two people under law to limit the rights of each party regarding financial proceedings via court. This helps to avoid costly court battles after a relationship ends.
If you want a prenup, it’s advisable to get advice from a family lawyer – it can get complex, and you don’t want to inadvertently do the wrong thing.
To validate a binding financial agreement, the agreement must be signed by all parties, with both partners seeking legal advice regarding the document draft. Each lawyer must provide their client with a signed statement that they have provided such advice. That statement must be passed to the other party.
There are different state laws in Australia with slightly different requirements, but generally, the binding agreement is the same.
Breaking a prenup if not adhered to
If for example a judge finds the agreement to be unjust or inequitable, the judge can find the agreement to be nonbinding. If one party fails to comply with the agreement, a court may get involved. The same rules apply for contracts, as to these types of agreements, since that is effectively what they are.
Terminating a financial agreement
A death does not terminate the agreement, and it continues to operate after the death of a party. This means the estate of the deceased is affected. Both parties can agree to terminate a binding financial agreement, done by a formal process known as a Termination Agreement.
There are certain events that could terminate the agreement, should that be laid out in the initial agreement. These are added as clauses.
From time to time, a judge may be requested to put aside the binding financial agreement, of which a judge has discretion. This could occur if the agreement would cause hardship to one partner or children due to a material change in circumstances, or there was duress to sign the agreement, fraud, mistakes, misrepresentations, incompleteness, uncertainty, breaches of public policy, or unconscionable conduct. Each case is heard and judged on its own merits.
Consent Orders
At the end of a relationship, a Consent Order may be more appropriate, whereby the agreement, reached out of court, is filed with the court. Sometimes these orders can be set aside, but the reasons are limited.
Talk to your lawyer
Your circumstances may change in the future, so before signing any agreement, it’s important to go through eventualities and make sure your interests are taken care of. Everyone has good intentions at the start of a relationship or marriage, but things change – life goes on, babies are born, people get sick, die, and get divorced.
Be thoughtful and cautious and objective when preparing for a prenup. Unfairness is not a reason to have a judge terminate a binding financial agreement. Contact us if you want a prenup drawn up or need help understanding one that has been given to you.
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