Binding Financial Agreements [Prenuptial Agreements]
A Prenuptial Agreement is a legal agreement intended to protect the property rights of a couple entering a de facto relationship or marriage.
Entering into a prenuptial agreement can often prove to be extremely useful, should a couple decide to separate in the future. Generally, prenuptial agreements can reduce the need for a property battle between spouses and allow for a more amicable outcome.
Here we have answered a few general questions to help you better understand prenuptial agreements and decide whether one will be advantageous for you.
1. What is a Prenuptial Agreement?
Prenuptial Agreements are covered under s.90B in the Family Law Act 1975 (the Act) and are a form of Binding Financial Agreement (BFA).
Parties entering a marriage, or a de facto relationship can establish a BFA which determines how the financial resources of the couple will be divided in the event of a breakdown of the relationship. A BFA can also be entered into during the marriage.
These agreements are usually drafted by lawyers with each party requiring Independent Legal Advice prior to its execution. The agreements will stipulate the division of the marital assets and provide for the maintenance of either spouse if necessary.
2. Are Prenuptial Agreements always binding?
Generally, a BFA is binding and has an element of finality, except when the court annuls such agreement on very exceptional grounds. These can include unconscionable conduct by one party or the exercise of undue influence on one spouse over the other at the time of execution.
3. What are the advantages of a Prenuptial Agreement?
BFA’s have multiple advantages such as.
- Allowing for the parties to a relationship to have the certainty of how their assets maybe divided in the event of a separation. This is a stark contract to the alternative of having to go to court to separate your assets after.
- The reduction of the unnecessary stress that arise during a very volatile period of a couple’s life, allowing them to focus on themselves and their children during a separation.
Another advantage is that a BFA gives a peace of mind on how future arrangements could be made.
Unlike litigations, BFA’s are private and only the parties and their lawyers get involved in working out the agreement, which means there is complete privacy between the parties.
BFA’s are also less time consuming and less costly compared to a court settlement or a court battle over the property.
Transactions that are done in accordance with a BFA have the same benefits as a court order. This means that there is stamp duty and Capital Gains Tax relief for transactions entered pursuant to a BFA.
BFA’s can be a great way to protect your assets and avoid resolving a dispute via the court system. Many people would benefit from a BFA and it is something that should be considered by all couples contemplating marriage or a de facto relationship.
While there maybe exceptional circumstances in which a BFA maybe set aside by the court, it is paramount that couples considering a prenuptial agreement freely discuss and feel comfortable about the matter, and have the agreement properly drawn up by a licensed professional.
If you would like to discuss whether a prenuptial agreement may be right for you, please contact our experienced team at MJ Legal to arrange a consultation.