RMB Articles

Pre-Nuptial Agreements

Posted 10-11-2014
Written by admin 101
Category Family Law

Pre-nuptial agreements may be routine amongst Hollywood actors, but it’s not just the fabulously wealthy who want to enter into a financial agreement with their intended spouse before marriage. The practice has become increasingly popular in Australia since becoming legal more than a decade ago.

Australia introduced pre-nuptial agreements in December, 2000 when the Family Law Act was amended to allow parties to a marriage, parties intending to marry or even parties who had divorced to waive their rights to property settlement and/or spousal maintenance by entering into a “Binding Financial Agreement”.

Since then other amendments to the Act have seen de facto couples dealt with by the Family Law Act and given the same rights to “contract out” of their rights and entitlements in relation to property settlement and spousal maintenance under the Act.

A Financial Agreement gives couples the ability to determine themselves how the assets of the relationship will be divided if the marriage or de facto relationship breaks down irretrievably. This means that the Court will have no power to apply the principles of the Family Law Act that require a just and equitable division of property.

The Act makes it clear that parties can enter into Financial Agreements before, during or after a marriage or de facto relationship.

But just how binding are they? It took quite a few years before the Courts were required to examine Financial Agreements and most of the early cases regarding validity and enforceability were focused on whether the Financial Agreement complied with the requirements of the Act, for example whether the Financial Agreement:

  1. contained a statement that each party was provided before the Agreement was signed with independent legal advice about its effect and advantages and disadvantages of the Agreement;
  2. had a certificate attached to the Agreement signed by a solicitor stating that they had provided the independent legal advice;
  3. was retained by one party and a copy given to the other party.

Some early Court interpretations took a strict approach and set aside Financial Agreements that did not meet the technical requirements of the Act. For example in 2006 a Financial Agreement was set aside by the Family Court because the certificates of independent legal advice attached were in the wrong form, and in 2007 a Financial Agreement was set aside because the requirement that one party retain the original and the other a copy was not met. It should be noted that the validity of Financial Agreements is usually only examined after the breakdown of a marriage of de facto relationship and one party to the Agreement seeks to set it aside.

However in December 2009 further legislative changes to the Act were passed to address the technical problems that had caused some Financial Agreements to be set aside. These amendments were intended to relax the “strict” approach that had been applied by the Courts in the past. However some Judges continue to apply a strict approach.

In light of the Court’s decisions regarding the validity and enforceability of Financial Agreements, extraordinary care can be taken to obtain good legal advice in order to ensure that your agreement strictly complies with the legislative requirements set out in the Act.