A Prenuptial Agreement or more commonly referred to in Australia as a Binding Financial Agreement (BFA) outlines how property and assets will be divided if a couple separates or divorces. In Australia, a BFA can be made before, during, or after marriage, and they can apply to both married and de facto couples.
The Family Law Act 1975 (Cth) prescribes the requirements for a financial agreement:
- There must be an agreement.
- The agreement must be in writing.
- The agreement must detail how the parties’ property interests and financial resources will be dealt with upon the breakdown of the marriage (or de facto relationship) or the maintenance of the parties or both the parties’ property interests and maintenance.
- The parties cannot be parties to another binding agreement that concerns the same matters.
- The financial agreement must be expressed as being made under the relevant section of the Family Law Act.
The Family Law Act also outlines when financial agreements will be considered binding on the parties and operate to exclude the jurisdiction of the Court. The Family Law Act prescribes the following:
- All parties must sign the financial agreement.
- Before signing the financial agreement, each party must have been given independent legal advice regarding the effect of the agreement on the rights of that party and about the advantages and disadvantages to that party making the financial agreement.
- Each party must receive a signed statement from their respective legal practitioner stating that the requisite legal advice was provided to them. A copy of the respective statements must also be given to the other party.
- The agreement must not be subject to a Court determination setting it aside or a terminating agreement.
Key matters dealt within a financial agreement include:
- Property Division: Specify how assets, debts, and property acquired before and during the relationship will be divided.
- Financial Support: Address spousal maintenance or financial support obligations.
- Inheritance and Gifts: Determine how inheritances or gifts received during the marriage will be treated.
- Debts and Liabilities: Outline responsibility for existing debts and future liabilities.
- Superannuation (Retirement Savings): Address how superannuation benefits will be divided.
- Dispute Resolution: Specify the process for resolving disagreements.
- Termination: Describe circumstances under which the agreement can be terminated.
There are exceptions to the validity of BFAs. These exceptions include situations where:
- Non-Disclosure: If one party fails to disclose all relevant financial information, the BFA may be set aside.
- Unconscionable Conduct: If the agreement was entered into under duress, undue influence, or unconscionable circumstances, it may be invalidated.
- Fraud: If fraud or misrepresentation occurred during the creation of the BFA, it can be challenged.
- Change in Circumstances: Significant changes (e.g., children, illness, financial hardship) may render the BFA unfair.
- Third-party provisions: Agreements entered into to defeat the legitimate claim or interest of a third party may be set aside.
The Federal Circuit and Family Court of Australia retains jurisdiction to determine whether the agreement is binding between the parties and successfully ousts the court’s jurisdiction. It is essential to seek legal advice tailored to your circumstances and to ensure compliance with the law.
Financial agreements do not cover parenting arrangements. Legal advice is crucial for navigating the financial and parenting aspects of separation or divorce.
If you are considering entering into a prenuptial agreement, is important to speak to a family lawyer first. We have experienced solicitors in Newcastle and the Central Coast area that can help you through your family law matter.
We offer a fixed fee initial consultation for $220. Simply Contact one of our friendly staff members to make an appointment.
