It’s common to hear of the rich and famous before a marriage, enter into a prenuptial agreement with their spouse.If an individual has significant assets to protect, it’s probably not a bad idea to have a prenuptial agreement in place in the event of a relationship breakdown.
In Australia, prenuptial agreements are more commonly referred to as binding financial agreements, and a valid agreement can oust the jurisdiction of the courts. When producing a binding financial agreement, there are a number of requirements that have to be met in order for the agreement to be valid, and an agreement can be produced before a marriage or cohabitation, during marriage or cohabitation, and after a divorce or the breakdown of a de facto relationship.
Binding financial agreements deal with how property and finances are dealt with in the event of a relationship coming to an end, and can also cover maintenance issues. However, a binding financial agreement cannot relate to parenting matters.
Just what is the legal effect of a binding financial agreement?
A valid binding financial agreement can eliminate the court’s ability to issue orders in regards to the distribution of assets or resources, which can usually be made under the provisions in the Family Law Act (the Act). In addition, a binding financial agreement can also have the effect of extinguishing the potential of paying maintenance to the other party.
Although there is no requirement for a binding financial agreement to be lodged with the court at the time the agreement is produced, the agreement is enforceable via an application to the Family Court.
In order for a financial agreement to become binding and enforceable, there are a number of formal requirements that must be met. The agreement must:
One of the most interesting elements of the formal requirements when creating an enforceable binding financial agreement is the condition that parties must have sought independent legal advice. Besides outlining the advantages and disadvantages of an agreement, the legal practitioner must also be able to communicate to their client the overarching effects of the agreement, while anticipating what approach the law might take in relation to the particular circumstances of the parties.
Additionally, an agreement can be varied by the parties if the circumstances have changed, however, all of the formal above-mentioned requirements must be followed when varying an agreement.
Although binding financial agreements can ouster the authority of the court, it can be set aside by an order under the following circumstances:
In the event that a court sets aside the financial agreement, it can make an order which transfers property in a manner that it considers to be fair.
Because binding financial agreements involve many technical aspects which can include issues relating to family and property law, it is essential that a person who is considering entering into a financial agreement, varying an agreement, or have the agreement set aside, to always seek legal advice from a family lawyers