Financial agreements (including prenuptial agreements.
What is a ‘prenup’?
A ‘pre-nup’ (prenuptial agreement or binding financial agreement) is a type of financial agreement which is governed by the Family Law Act 1975 (Cth) and is a binding contract between spouses (or partners) or ex-partners. However, in order for the contract to be binding, strict rules need to be followed, therefore legal advice is required.
The term ‘prenup’ is misleading as these types of agreements can be made before a marriage (or at the start of a relationship) during the marriage (or during the relationship) or after separation.
These agreements cover what will happen financially during the relationship and if the relationships ends.
The Family Law Act 1975 (Cth) also allows for de facto and same-sex couples to enter into financial agreements.
Do I need one?
Oftentimes, the most difficult and emotionally draining part of separation is the component of dividing up assets and determining who gets what. The purpose of entering into a financial agreement is to reduce the stress of separation and to avoid lengthy and costly proceedings following separation.
A financial agreement details how the assets and resources will be divided in the breakdown of your relationship. It can also include provisions with respect to spousal maintenance.
Circumstances in which a couple may wish to consider entering into a financial agreement include:
where one party has considerably more assets than the other;
where one party owns a business and wants to maintain control of that business in the event of the relationship breaking down;
where one party is likely to receive a significant inheritance;
where the parties want certainty as to how the assets will be divided and to minimize costs in the event of separation.
As the name states, financial agreements only deal with ‘financial’ matters’. They cannot include arrangements regarding parenting matters.