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Are you about to get married or enter into a defacto relationship but worried about your assets? Is a Pre Nup the answer?

At Brazel Moore Lawyers, our Family Law team often receives enquiries about “Pre-Nups“.

Such enquiries often come from people who are thinking of getting married or are about to enter into a defacto relationship, often a second or third one in their lives, and who are concerted that, if such a relationship breaks down, the new partner will have a claim on some of their property they had before they commenced the relationship.  Our callers often tell us that they would like to have a Pre-Nup made, so that the new partner cannot “touch their current assets”.

What is a “Pre-Nup” and does it really ensure foolproof protection for your assets?.

A Pre-Nup, short for “Prenuptial Agreement” is an American term and although commonly used the correct name for such agreements in Australia is a “Binding Financial Agreement” or “BFA“, made before a couple gets married or enters into a defacto relationship, which sets out how the assets of the parties are to be dealt with if the relationship breaks down.  The assets that the Pre-Nups can deal with include real estate, savings, shares, your interest in a business or trust, your investments, an entitlement to an inheritance, superannuation or pension.

In theory, a Pre-Nup is meant to protect your property if you separate.  Obviously, it is often in the interests of a more well-off party to have such an Agreement made.

Our answer to the enquiries about Pre-Nups is that, while they may be of some use to you, they do not totally eliminate the risk that your assets remain safe in the event of the break down of your relationship.  This is because such Agreements are not all that simple.

Even if you are successful in your, not so romantic (let’s admit it), attempt to make your future partner/spouse sign an Agreement that will spell out what he/she will get (or, most commonly, not get) if you separate, there are other worries in store for you if you contemplate a Pre-Nup.

Under the Australian Family Law Act, a Pre-Nup can be set aside by the Family Court (and be no longer binding on the parties) if one of the parties applies to the Court and succesffuly proves that either –

  1. There has been a material change in the circumstances of the parties (for example, the birth of a child); or
  2. One of both parties did not receive competent independent legal advice before the BFA was signed; or
  3. Putting the agreement into effect would cause substantial injustice or hardship on the other party (particularly, but not only, if they are caring for a child); or
  4. One or both parties failed to fully disclose their financial circumstances to each other when the Agreement was made; or
  5. The Pre-Nup was signed under duress (where one of the parties exercised unreasonable pressure on the other party to sign it).

For example, in one of the cases recently considered by the Court, the wife, who was from Thailand and at the date of signing of the Pre-Nup set aside by successfully arguing that she had signed the Pre-Nup under duress as, before the wedding, her future husband threatened not to marry her and not to sponsor her fiancee visa if she did not sign it.

When your solicitor drafts a Pre-Nup, they should exercise great caution and diligence to minimise, as much as possible, the rist of the Pre-Nup being challenged in Court when a break up of the relationship occurs.  They should therefore make sure that you and your future partner/spouse are transparent about their financial circumstances at the time of the making of the agreement and disclose all of their property and debts and produce documents to each other with evidence of their financial positions.  Your solicitor should also provide detailed advice to you and ensure that the other party receives proper advice from their solicitor before signing the agreement.  Such advice should preferably be in writing.

At Brazel Moore Lawyers, we exercise great care when drafting Pre-Nups for our clients and providing advice to them as to its advantages and disadvantages, to make a property settlement less stressful in the (hopefully, unlikely) event if the relationship breaks down.

For more information on your rights or any aspect of Family Law contact Julia Ejelovitch, Family Lawyer at Brazel Moore Lawyers on (02) 4324 7699.

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