Planning for a divorce before the marriage has even begun may seem unromantic to most people. However, when dealing with family law issues, it is sometimes necessary to be prepared for the worse while always hoping for the best.
Having a prenuptial agreement before you get married can go a long way to protecting your assets and making sure everyone is taken care of should a divorce happen.
What exactly is a prenuptial agreement?
A prenuptial agreement, commonly referred to as a "prenup" is a binding financial agreement that dictates how assets and liabilities will be divided in the event of a separation or divorce.
Written financial agreements dealing with marriage are set out by the Family Law Act 1975. Formally known as a 'Binding Financial Agreement' (BFA), they come in three main types: those that occur before a marriage, during a marriage or after a separation.
A BFA will usually cover how all or part of the property and financial resources of the parties is dealt with in the event of a marriage breaking down. It might also include provisions for the financial maintenance of either party during the marriage and what will happen after the marriage ends.
Is it worth getting one?
Although it is often thought that only the very wealthy need to have one of these documents, prenups are becoming increasingly common in modern Australian life. Without a prenuptial agreement, in the event of a divorce your assets and debts will usually be divided between you and your former spouse.
The Family Court is also able to calculate certain types of financial and non-financial items as property to be divided. They calculate the direct and indirect financial contributions each party made to the relationship, including contributions like caring for children and homemaking.
What are the risks?
The advice of a good family lawyer is essential to making sure the prenuptial agreement will be written and executed as intended should the need arise.
For a BFA to be legally binding, both parties must meet certain conditions. This means making a full and frank disclosure of all assets, liabilities, income and resources is part of the process, as is getting independent legal and financial advice before signing.
Another risk is that the courts can declare an agreement to be invalid and set it aside. This can happen if there is evidence that one party put pressure on the other to sign a prenup just before the wedding. Fraud and blackmail are also grounds for setting aside the agreement.
To learn more about preputial agreements and how to create one, make sure to consult with a family lawyer. They will be able to provide specialised advice to suit your individual situation.