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"Pre-Nup" Agreements and Do They Stand Up

Since December 2000, parties contemplating marriage can enter into a “pre-nuptial agreements”

Practicable example
For example, a wealthy male owning two investment properties is engaged to marry a woman who has no assets. The parties agree to enter into a Pre-Nuptial Agreement which provides that he can retain his investment properties in the event of a breakdown of marriage without his Wife making a claim on these properties.

He therefore, upon separation, is able to keep these assets and avoid a potential drawn out case in Court.

Benefits

1. Where one party has greater assets than the other.
2. Where one party is likely to receive a large inheritance in the future.
3. Where one party (or both) has a child of a previous relationship and they wish to protect their assets.
4. It reduces legal fees upon a marriage breakdown and provides the parties with certainty.

The Pre-Nuptial Agreement removes the Family Court’s jurisdiction over the property and resources that are dealt with in the Pre-Nuptial Agreement.

To ensure the Pre-Nuptial stands up

1. It must be signed by each party.
2. Each party must have legal advice prior to signing the Agreement and the lawyer needs to sign a Certificate. It is essential that the strict requirements of the Family Law Act are complied with.
3. The original Agreement needs to be given to one of the parties and a copy to the other.
4. The Agreement cannot have been terminated.

Ways an Agreement can be set aside

1. Fraud or non disclosure of a material matter.
2. Circumstances in which either party entered into the Agreement with the intention to defeat a creditor.
3. Void or voidable agreement.
4. Unconscionable conduct.
5. “A material change in the circumstances” relating to the care, welfare and development of the child of the marriage.

Recent cases where Agreements have been challenged

• An Agreement was set aside for fraud (including non disclosure) even though the non disclosure was an inadvertent omission. The full assets and liabilities of one party were not set out in the Agreement. The Wife was also found to be under duress to sign the Agreement as she was under pressure to sign the Agreement five days prior to the wedding taking place, and her Visa was due to expire in less than two months if she did not marry.
• One Agreement was overturned on a technicality relating to the issue of the legal certificate not being re-executed after the Agreement was amended.

Financial Agreements are here to stay

• They represent a major public policy shift and enable the parties to manage their own affairs.
• It is important for parties to seek advice from an expert prior to contemplating entering into an Agreement.
• The Agreements will stand up if executed properly.
• As of 1 March 2009, De Facto Parties can enter into the equivalent of a Pre-Nuptial under the Family Law Act as of 1 March 2009.