TRANSCRIPT
What can you do to maximise the enforceability of your Binding Financial Agreement (known colloquially as pre-nups, post-nups or cohabitation agreements)?
In today’s video, I’ll be collectively referring to Binding Financial Agreements entered into before or during a marriage or de facto relationship as “pre-nups”.
No type of contract is 100% enforceable 100% of the time, so here are some tips for you to reduce the risk of your prenup being overturned or ‘set aside’ by a court if challenged:
- Get independent legal advice: To comply with the strict requirements for prenups under the Family Law Act 1975, both parties must receive independent legal advice before signing a prenup and obtain a Certificate from their lawyer which is included in the agreement. Each party has therefore had the opportunity to carefully consider the agreement and the advantages and disadvantages of entering into the prenup before it is finalised.
- Provide full disclosure: Both parties must fully and honestly disclose their financial situation. A failure to provide full and frank disclosure may result in the prenup being set aside – so don’t hold anything back.
- Consider your emotions and surrounding circumstances: prenup’s must be entered into voluntarily, without coercion or undue influence. Discussing finances and potential separation can be emotionally challenging for some couples, so it’s important to consider the timing of the prenup and not try to rush one if, for example, your wedding date is fast approaching. This could lead to the prenup being successfully challenged in the future.
- Remember that there are many variables to consider: Prenups often require complex drafting as they attempt to cover future changes in circumstances and a multitude of variables as best as possible. Keep in mind that life is often unpredictable and not all potential scenarios can be foreseen.
- Aim for fairness and reasonableness: Be mindful if there are power imbalances in the relationship and attempt to address these. A prenup that is heavily skewed in one party’s favour may be subject to greater scrutiny and open to future challenges. Agreements that achieve more fair and equitable outcomes are more likely to be upheld by a court.
- Regular review: It’s advisable to review the prenup periodically to ensure it still meets the couple’s needs. A prenup can be updated and varied with the consent of both parties if strict legal requirements are followed.
Prenups are certainly worthwhile documents to have drafted and can provide a source of security and comfort to couples before or after relationship issues arise. Contact us at LEDA Lawyers if you are considering entering into a prenup or if you need to review an existing one.