What are they?
The term pre-nuptial agreement (or pre nup) is an everyday term describing an agreement entered into between two parties in contemplation of marriage. It will generally make provision for what is to occur in the event of separation. Often assets are `quarantined’ from a future claim in such an Agreement.
It seems these days that news of any celebrity separation is followed by a headline which begins with “his/her pre-nuptial agreement states” or “no pre-nuptial agreement was ever signed”. Often the latter headline is accompanied by commentary as to why a pre-nuptial agreement should have been signed and who will be the big winner out of the separation as a consequence of there being no pre-nuptial agreement in place.
Pre-nuptial agreements were originally seen as something that only established and wealthy individuals would need. This perception is changing as more couples appreciate the clarity and security that such an Agreement can offer to both a couple, and often their families.
Are they legal in Australia?
In Australia a pre-nuptial agreement is more commonly referred to as a “90B Agreement”, the name being derived from the relevant section of the Family Law Act under which the Agreement is made.
A 90B Agreement is entered into by two people prior to them being married. The terms of the Agreement sets out how, in the event of separation, the finances of both parties will be dealt with and how the parties’ interests in property will be distributed.
There is another variety of legal agreement that allows de facto couple, whom are not planning to marry, to make provision for what will occur should they separate.
When do they work?
90B Agreements are only binding if they meet strict legislative guidelines. For this reason, great care is required in drafting and executing these Agreements.
Even if the Agreement is binding, some grounds on which a 90B Agreement can be set aside are:-
- the agreement was obtained by fraud (including non-disclosure of a material matter); or
- where a material change in circumstances has occurred that relates to the care of a child, and the child, or party to the agreement with the care of the child would suffer hardship if the agreement were not set aside; or
- when unconscionable conduct is has occurred; or
- when circumstances arise which means that it is impractical for the terms of the Agreement to be carried out.
Seek Legal Advice
Both parties must obtain independent legal advice with regard to the Agreement before it is binding and it is highly recommended in the current legal climate that each party engages with a highly experienced family law practitioner.
An experienced legal practitioner at Best Wilson Buckley will explain to you the following prior to you signing a 90B Agreement:-
- The effect of the Agreement on your rights; and
- The advantages and disadvantages of you entering into the Agreement.