Pre-Nuptial Agreements

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Author: Andrew Corish BA LlB – Accredited Specialist Family Law

Publish Date: August 2004

It is now possible to enter into binding Pre-Nuptial Agreements (PNAs). These are agreements made prior to and in contemplation of marriage, and deal with financial arrangements in the event of separation. De facto couples have been able to enter into such binding agreements since 1984. However such agreements were not binding upon married couples until a change of the law in 2000 (Family Law Act, Part VIII sections 90 A-Q). The change allowed for Binding Financial Agreements to be entered into, not only for those contemplating marriage, but also for those within a marriage or following separation. We will just consider pre-nuptial agreements (PNA’s) for the moment, but many of the same provisions apply to the other agreements.

By entering into a PNA, you can effectively exclude the Family Court from interfering or being involved in your financial affairs, if, despite your best endeavours, the marriage does not work out for whatever reason. You can regulate exactly what property and spousal maintenance arrangements are to apply at that time, or extinguish the right of either party to apply for spousal maintenance. You can quarantine certain property; such as a home, farm or business, from consideration in any subsequent family law action.

There are some exceptions to this right to prevent the Family Court being involved in the event of separation. You may not be able to prevent a spouse applying for spousal maintenance at some time in the future if, at that time, the party was unable to support themselves without a means tested pension. You can’t enter into a PNA to affect a parent’s entitlements to obtain child support under the Child Support Act (although you may be able to enter into a separate binding Child Support Agreement.)

Also a PNA may not be binding if the Court finds that the agreement was obtained by fraud, (including the non-disclosure of a material matter); if after the agreement a material change in circumstances occurs which affects the well-being of a child; if the agreement is “unconscionable” or in certain other cases. However the exceptions are quite limited and difficult to prove.

The pre-conditions for a PNA to be binding are that it is signed by both parties, as well as by a separate independent lawyer on behalf of each party, who annexes a certificate that they have provided their client with advice as to the effect of the agreement and its advantages and disadvantages.

A PNA should usually include a detailed statement of the background and intentions of the parties and a detailed list of exactly what assets each party has, the value of each of those assets, and what is their intention concerning those assets, and in respect of future assets they may acquire. The more carefully-drafted and detailed the agreement, the less likely it is to be set aside in the event of a subsequent dispute.

PNA’a are not for everyone. They should not be entered into lightly. They involve anticipating events which may occur in the very distant future and can create great injustice. They can generate a lot of ill-will and hostility and be an ongoing source of tension between spouses and to some extent be a self-fulfilling prophecy of doom.

However for others they can be very suitable and perhaps a source of harmony and security in respect of their married relationship.

They are particularly suitable for those who are entering into second or subsequent relationships; perhaps bringing in assets of great value, and perhaps having already been stung once by the expense, uncertainty and anxiety which family law disputes can generate.

They can be suitable to preserve the operation and existence of a family farm, family business, or family home. The agreements can be quite specific and limited to certain specified assets, which are to be excluded from consideration in any future family law dispute, but that otherwise the parties retain their future family law rights and entitlements.

Agreements can have a “sunset clause” and be limited to a initial period of time, to see if the marriage works out but thereafter the agreement lapses.

Agreements can provide some protection to the estates of the parties, from attack by an ex-spouse under the Family Provisions Act, who is seeking some additional provision in excess of what has been provided for in a Will.

PNA’s need careful consideration detailed drafting and should only be entered into after obtaining legal advice and after proper negotiations.