Binding pre-nuptial agreements were introduced into Australian law on 27 December 2000. Prior to this, binding financial agreements between spouses could be entered only on separation, and had to be court-registered. They were otherwise only recognised at the discretion of the court.
Today, binding financial agreements can be entered into prior to marriage (pre-nuptial agreements), during marriage(post-nuptial agreements) and when moving in with your partnert (co-habitation agreements).
People who are contemplating entering into a marriage can make a financial agreement with respect to the following matters:
- How in the event of separation, all or any of the property or financial resources of either or both of them is to be dealt with at the time of agreement or before the dissolution of the relationship.
- The maintenance of either party after the dissolution of the relationship, and the financial contributions in child maintenance in the event of the dissolution of the relationship.
Court Powers to Alter Maintenance
No maintenance provision in a financial agreement excludes or limits the power of a court to make a maintenance order if the court is satisfied that when the agreement was made, the circumstances were such that, taking into account the terms and effect of the agreement, the party would have been unable to support himself or herself without an income tested pension, allowance or benefit.
Checklist for a Binding Financial Agreement
1. Agreement signed by both parties
2. The agreement contains a statement that each party obtained independent advice from a legal practitioner as to the following matters:
- the effect of the agreement on the rights of that party
- whether it was an advantage or disadvantage of that party to make the agreement
- whether or not it was prudent for that party to make the agreement
- whether the provisions of the agreement were fair and reasonable in the circumstances
3. An annexure (attachment) to the agreement contains a certificate signed by the legal practitioner stating that such advice on the above matters was provided
4. the agreement has not been terminated or set aside by a court of law
5. Upon signing, the original agreement is given to one of the parties and a copy is given to the other.
If these requirements are fulfilled, the court may make any such necessary orders for the enforcement of the financial agreement.
The Death of a Party to a Financial Agreement
Most Australians perceive pre-nuptial agreements in terms of property division instruments in the event of a divorce. However under section 90H, a financial agreement survives the death of a party to the agreement and becomes binding upon the legal personal representative of that party. Thus, pre-nuptial agreements have the capacity to protect your personal assets for the benefit of your children and other heirs upon your death.
Court Power to Set Aside a Financial or Termination Agreement
A court can set aside both financial and termination agreements if satisfied that:
- the agreement was obtained by fraud (eg non-disclosure of a material matter); or
- the agreement is void, voidable or unenforceable (eg the binding requirements were not fulfilled); or
- circumstances have arisen since the agreement was made that make it impracticable for the agreement or part of the agreement to be carried out; or
- since the agreement was made, a material change in circumstances that relate to the care, welfare and development of a child of the marriage has occurred. As a result of the change, the child, one who has caring responsibility for the child (parent, person with residence order or specific issues order in relation to care, welfare and development) or a party to the agreement will suffer hardship if the court does not set the agreement aside; or
- a party to the agreement engaged in unconscionable conduct in the process of developing the financial agreement (eg signing the agreement on wedding day)
In the News
Sign or be sorry – The Australian, 21 February, 2007