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The Family Law Act makes provision for binding financial agreements between parties to a marriage. These agreements can be made before the marriage, during the marriage or after the couple divorce. Agreements entered into before marriage are commonly known as prenuptial agreements.
Prenuptial agreements can set out how the property and financial resources of the parties are to be dealt with in the event of the breakdown of the marriage. They can also provide for the maintenance of either of the parties during the marriage or after the parties divorce.
There are certain formal requirements that need to be met. In order to be binding, a financial agreement must be in writing and signed by both parties. Each party must obtain independent legal advice and the lawyers advising the parties must sign certificates to say that they have given independent advice.
Advantages of a Prenuptial Agreement
A well drafted prenuptial agreement, prepared after proper consideration by the parties as to what they require, can enable a couple to embark upon their marriage knowing that if the marriage ends they will not have to fight about the division of their property. This can be particularly important for someone who has already experienced a marriage breakdown.
Disadvantages of a Prenuptial Agreement
The law in relation to binding financial agreements between married couples is very new and there is some uncertainty about how the courts will interpret the law. It is therefore unclear in what particular cases a prenuptial agreement will be set aside. If an agreement is entered into without careful thought then circumstances might arise which were not anticipated and which make the terms of the agreement unfair.
What should you do if you want a binding Prenuptial Agreement?
If you intend to enter into a prenuptial agreement then you must first think about how you want your property and your future spouse’s property to be dealt with if your marriage breaks down. You and your partner should discuss your future plans including:
- Whether you both intend to work during the marriage;
- Whether you plan to have children;
- What arrangements there will be in relation to children that either of you currently have;
- What will happen if either of you can’t work because of illness or injury or the need to care for a disabled child;
- Whether you wish to make special provision in relation to inheritances and if so what you expect to receive and what you expect to do with your inheritance;
- What provision you each intend to make for retirement;
- How you intend to meet your financial commitments and pay your living expenses;
- Whether you intend to have a joint bank account or intend to keep your finances separate.
If you would like more information or advice regarding Prenuptial Agreements or if you have another Wills & Estate Planning matter, please complete and submit the express enquiry form on the top right hand side of this page or call us on +61 2 9223 9166 to arrange an appointment.
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