PRENUPTIAL AGREEMENTS – BINDING FINANCIAL AGREEMENTS BEFORE MARRIAGE OR DE FACTO RELATIONSHIP
A prenuptial agreement, or “prenup” is legally known in Australia as a Binding Financial Agreement (BFA). It is a legal document that sets out how a couple’s assets, liabilities, and financial resources will be divided in the event of separation or divorce. A prenup is not just for couples intending on getting married – couples entering into a de facto relationship can also enter into a “prenup” type of BFA.
Having a prenup is not about expecting a relationship to fail; it’s about fostering open communication and setting clear expectations. It’s a vital tool for protecting pre-existing assets, safeguarding inheritances, and ensuring a fair and efficient resolution if circumstances change.
At LEDA Lawyers, we understand that this is a significant and sensitive step. Our role is to provide expert guidance and support, ensuring the process is handled with professionalism and care. We work with you to document a comprehensive and legally sound agreement that reflects your wishes, protects your interests, and, most importantly, complies with all the strict requirements of the Family Law Act 1975 – providing the certainty you need for your future.
WHAT CAN A bfa (prenup) cover?
A prenup can cover a wide range of financial matters if a couple were to separate in the future, including:
- Division of property: This includes real estate, cars, shares, and other assets.
- Superannuation: The agreement can specify how superannuation entitlements will be divided.
- Liabilites: It can determine responsibility for debts like mortgages, credit card debt, and personal loans.
- Spousal Maintenance: A prenup can include provisions for spousal maintenance, outlining whether one party will provide financial support to the other and for how long.
- Inheritances & gifts: It can protect assets that one party has inherited or received as a gift.
WHY GET A BFA (PRENUP)?
People choose to enter into a prenup for various reasons:
- Protecting pre-existing assets: A prenup is particularly useful for individuals who have significant assets, such as a business or property, before entering a relationship.
- Clarifying financial responsibilities: It can provide clarity and certainty regarding each person’s financial contributions and responsibilities during the relationship.
- Protecting inheritances: A prenup can ensure that any future inheritances remain the property of the intended recipient.
- Avoiding future disputes: By proactively deciding on financial matters, a prenup can significantly reduce the potential for costly and emotionally draining legal battles if the relationship ends.
are bfa’s (prenups) legally binding?
For a BFA to be legally binding and enforceable by a court, both parties must meet several strict requirements under the Family Law Act 1975. The most critical requirement is that each party receives independent legal advice about the effect of the agreement on their rights and the advantages and disadvantages of making the agreement.
Your lawyer must provide a signed statement confirming this advice has been given. This ensures both parties are fully informed and not coerced into signing.
What makes a bfa (prenup) invalid?
A court can set aside a BFA (i.e. decide that a prenup does not apply) under certain circumstances, including:
- Fraud or non-disclosure: If one party failed to disclose a material matter, such as a significant asset or debt.
- Duress or undue influence: If one party was pressured or coerced into signing the agreement.
- Change in circumstances: If a significant and unforeseen change in circumstances has occurred since the agreement was made, such as a child being born into the relationship, which would result in one party suffering hardship.
- Non-compliance with legal requirements: If the agreement was not drafted and signed correctly, or if one or both parties did not receive the required independent legal advice.
how much does a bfa (prenup) cost?
The cost of a BFA varies depending on the complexity of your financial situation. It involves legal fees for writing the document and for each party to receive their own independent legal advice (i.e. one law firm drafts the agreement and provides independent legal advice to one party and then the other party gets independent legal advice from another law firm). Costs are typically upwards of $2000 for the party having the agreement drafted. While the initial cost may seem high, it is a small cost for peace of mind and a fraction of the cost of taking the matter to court if the relationship breaks down in the future.
how to get started
LEDA Lawyers can guide you through the entire process of creating a legally sound prenup. Our approach is to:
- Understand your unique circumstances: We take the time to discuss your assets, liabilities, and goals for the agreement.
- Draft the agreement: We write a comprehensive and clear prenup that reflects your intentions.
- Ensure compliance: We ensure all legal requirements are met, including the critical step of providing independent legal advice to one party.
Ready to take the first step? Call us on 02 8528 7590 or fill out our online inquiry form to schedule your confidential consultation.