Pre-Nuptial and Binding Financial Agreements
In certain circumstances, the courts will be bound by the terms of Pre-nuptial Agreements (Pre-nups) or Binding Financial Agreements (BFAs) following the breakdown of a relationship. Pre-nups are made before a couple starts living together or while they are living together, which may include after marriage. BFAs formalise an agreement between parties about how they want their property to be divided, should the relationship end.
Think of a BFA as an insurance policy or risk management tool. No one hopes their relationship will end, but 40% of marriages fail and this rate only increases in 2nd or subsequent marriages. Pre-nups and BFA’s help to protect you.
For parties thinking about a new relationship, especially if they have experienced a separation and property settlement before, having a pre-nup is reassuring. They are also useful for people who come to the relationship with significant property and who want to protect that property in the event of the end of the relationship. Provision for how property acquired during the relationship is to be divided is also a common feature of these agreements.
How do I make a Pre-Nuptial or Binding Financial Agreement?
There are important and strict formal requirements for the making of pre-nups and BFAs. Before signing the agreement, each party to the agreement must have obtained independent legal advice about the advantages and disadvantages to that party entering into the agreement. Each lawyer must sign a statement about this legal advice and that document must be attached to the agreement.
Financial agreements can also deal with spousal maintenance (link) and if certain pre-conditions exist, the agreement may exclude the operation of the Family Law Act and prevent the Court, in the future, from exercising its power to make orders about spousal maintenance.