Thanks to celebrities, we’ve all heard about prenups or prenuptial agreements. And as Kanye West put it - "It's something that you need to have".
In Australia, prenups are also known as Financial Agreements, and they set out how your property and assets (including any debts) will be divided if your relationship breaks down.
A prenup can be made before, during or after you get married and includes people in de facto and same-sex relationships too. With many marriages in Australia ending in divorce, a prenup could save you the stress of who gets what at the end of a relationship.
Prenups are popular for those entering into a second marriage or de facto relationship. They provide some level of security and allow parties to control their financial affairs.
It’s important that prenups are done legally, which means they must comply with strict requirements as well as a certificate from a family lawyer stating that you have received proper advice. If the agreement is not done legally it will not be upheld and you may have to go to court if your relationship breaks down.
When are prenups appropriate?
It’s never easy talking about prenups with the person you love, but there may be times where a prenup could be important, and save you the stress if the relationship breaks down, for example when:
- One person has much more property and assets than the other at the beginning of a relationship
- One person is, or may later become entitled to an inheritance or gift
- You are moving in to another relationship where your children might need to be financially protected; or
- You both simply want to make sure the terms of any property division are agreed up front and will not end up in court.
When drafting a prenup, it’s important that you list ALL assets and liabilities, to prevent the agreement being set aside, or made invalid. If drafted properly, a prenup can oust the power of the Family Courts to deal with the assets as set out in the agreement.
What if I don’t have a prenup?
If your relationship breaks down - whether de facto or marriage - and you do not have a prenup, it is important that you obtain legal advice on the rightful distribution of your property and your other rights and responsibilities.
Care needs to be taken when the agreements are made. They must be entered into freely, giving each party sufficient time to negotiate the terms of the agreement. There can be no suggestion of coercion and some thought needs to be given as to whether the agreement will remain binding given the length of the relationship and particularly if there are children involved.
The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.