As people are increasingly marrying later – often after they have acquired substantial assets or have a more complex financial arrangement as a result of previous partnerships – pre-nups are on the rise.
Seeking a pre-nup can be tense ground to broach, although in some cases both parties are equally keen to clarify the financial footing that will apply if the marriage does not last.
These days, pre-nups are more properly referred to as Binding Financial Agreements (BFAs). BFAs were previously only applicable to de facto relationships but are now legally enforceable for married couples.
Couples contemplating marriage will be able to make a BFA about how property is to be divided before, during, and after marriage. The agreements will also be able to enforce lifestyle and childcare arrangements during marriage.
Couples will be free to make their own arrangements, but must obtain independent legal advice for the agreement to be binding. If independent legal advice is not obtained the courts will have power to set aside the agreement and deal with the property as they see fit.
Normally the courts will not be able to overturn a BFA. Situations where a BFA may be overturned however are:
- The agreement was obtained fraudulently
- The agreement is void, voidable, or unenforceable under the law of contract
- It is now impracticable for the agreement to be carried out
- There has been a material change in the responsibility of caring for a child
- One of the parties is deemed to have engaged in unconscionable conduct in making the agreement
- Where the court is of the opinion the agreement was entered into with the purpose of defrauding or defeating creditors of one of the parties
- There is a technical defect resulting in non-compliance.
A BFA cannot be varied. Unlike orders over marital property by the Family Court, there is no CGT rollover relief for dispositions of property occurring under a BFA.
BFAs are most commonly be used by people with substantial assets who are planning a second marriage.
Source: Strategy Steps Pty Ltd.