Just because you are thinking of drafting a prenup does not mean that you are also thinking of divorce. A lot of people fail to plan, and that is all a prenup is – a plan that is (legally) set in stone. A prenuptial agreement, or a prenup, is a binding contract between two people, which they sign and agree to before they marry. However, a de facto agreement is also binding and enforceable in Australia if it is drafted correctly, and you can have a look at our prenup guide for same-sex couples.
Why Have a Prenup?
Most people know a prenup is intended to set out the engaged couple’s financial plan if the marriage breaks down, but it can include other matters. In fact, negotiating a prenup has the potential to promote greater communication and happiness during the marriage, because it addresses uncomfortable but real issues that might pop up down the track anyway.
Broadly speaking, a prenup will cover:
- How the property and other financial resources are to be dealt with following a divorce;
- The conduct of either or both parties during the marriage; and
- Any other matters that are relevant or unique to your situation.
In the unfortunate situation that your marriage does break down, a prenup will save you significant time, effort and emotional stress. Even more, a prenup does not have to be registered or approved by the court, so as long as the agreement is correctly drawn up, you have already completed the process.
Try and remember the following five tips when thinking about your prenup.
1. Don’t Leave It to the Last Minute
You should try and make sure that your prenup is signed at least thirty days in advance of your wedding, but the earlier, the better.
2. Be Precise and Have a Plan
It will be a lot easier to prove what belongs to whom if it is written down in the prenup. In the absence of a pre-marital agreement, the division of assets, among other things, will be left to the discretion of the court, and would cost significant time and expense.
For example, if you have inherited property you may want to state in the prenup whether the property shall remain in your name or shared jointly with your spouse.
Prenups are also a way to protect yourself and limit your responsibility in case either partner incurs any form of debt. Having an action plan to handle this kind of situation may be a blessing in disguise.
Whatever arrangement you want to agree on, make sure it is precise, and that it is written clearly.
3. Make It Fair
To ensure that it is upheld in court (thinking about the worst case scenario) make certain the provisions are fair.
4. Get Advice
This goes for both of you. The slightest hint of forced entry into a prenup may invalidate the whole agreement so it is best that both partners seek independent legal advice.
Getting somebody who has experience writing prenups is also essential so that your agreement is prepared properly. Especially because it may have to comply with some requirements of the Family Law Act 1975 (Cth). Going through this process will also allow you to ask questions about other matters that you may not have previously considered to include.
To ensure that your prenup is a binding agreement, it should:
- Be signed by both parties;
- Contain a statement that each party obtained independent legal advice;
- Include a statement attached to the agreement, by the legal practitioner stating that their advice had been given; and
- Be given to both parties to keep.
5. Keep Your Prenup Updated
Just like a will, your prenup may need to be updated if there has been a marital change. For example, if you would like it to include an agreement on child support or you have acquired another form of property. Contact your lawyer if there has been any marital change.
Having a prenuptial agreement in place before you get married can ensure that you address important personal and financial issues before tying the knot, and plan ahead in the unfortunate event that your relationship dissolves.
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