What is a “Prenup”?

A “prenup” or “prenuptial agreement” are the colloquial terms for what the Family Law Act refers to as a Binding Financial Agreement (BFA).

BFAs can be entered into by two parties who intend to marry, or enter a de facto relationship, which is where the term “prenup” comes from.

A BFA identifies the assets, liabilities and financial resources of each party at the commencement of the relationship and makes provision for how this property will be divided in the event of separation.

How do they work?

The Family Law Act has strict requirements for BFAs:

1.    They must be in writing.

2.    Both parties must make complete disclosure of their financial position, including their assets, liabilities and financial resources at the time of entering the marriage or relationship.

3.    Both parties must receive independent legal advice from an Australian lawyer.

4.    Both parties must sign the agreement of their own free will – any evidence of coercion, duress or undue influence will negate the agreement.

Should you enter into a BFA?

Entering into a BFA is not about setting your relationship up to fail: they are designed to remove uncertainty and the cost and stress of litigation in the event of separation.

That said, we do not consider that a BFA is necessary or advantageous for all parties before getting married or entering a new relationship.

Advantages

Disadvantages

·       Protects valuable assets, such as pre-owned property, inheritances or expected entitlements.

·       May not take into consideration the changing health, employment or financial resources of the parties.

·       If one party is moving into the other party’s home.

·       Contributions made throughout the relationship may not be taken into account.

·       Protects the party who has contributed the greater number (and value) of assets to the relationship.

·       Children may not be adequately considered in the preparation of the agreement.

To discuss whether a BFA is right for you, or if you would like us to review and advise on a BFA drafted by your partner, please contact Littles Family Lawyers.