What is a Financial Agreement before marriage (Pre-Nuptial Agreements) and can they be overturned?

Posted on Jul 28, 2020 by Matthew Carney   |   Categories: Family Law

Family lawyers are often asked if pre-nuptial agreements (a financial agreement) are binding. The short answer is, yes, they are, if drafted correctly. However, financial agreements can also be overturned if certain criteria are not met.

What is a financial agreement before marriage?

The Family Law Act allows couples who are considering getting married to make a written agreement about how their property is to be dealt with in the event of the breakdown of their marriage. It also allows for each party to make provisions for the payment of maintenance to the other party, during the marriage and/or after divorce.

 

When is a financial agreement binding?

A financial agreement is binding if, and only if, all of the following criteria are met:

 

  1. the agreement is signed by all parties;
  2. before signing the agreement, each party was provided with independent legal advice about the effect of the agreement and about the advantages and disadvantages of making the agreement;
  3. each party was provided with a signed statement by the legal practitioner stating that the independent legal advice was provided;
  4. a copy of the statement confirming independent legal advice was given to each party; and
  5. the agreement has not been terminated or has not been set aside by a court.

 

Can a financial agreement be set aside or overturned by consent?

The parties to a financial agreement may terminate a financial agreement by including a clause setting aside the original financial agreement in a new financial agreement or by making a new written agreement (a termination agreement) setting aside the original financial agreement.

 

A termination agreement will thereafter be binding if, and only if all of the following criteria are met:

 

  1. the agreement is signed by all parties;
  2. before signing the agreement, each party was provided with independent legal advice about the effect of the agreement and about the advantages and disadvantages of making the agreement;
  3. each party was provided with a signed statement by the legal practitioner stating that the independent legal advice was provided;
  4. a copy of the statement confirming independent legal advice was given to each party; and
  5. the agreement has not been terminated or has not been set aside by a court.

 

How can a financial agreement be set aside?

 

A court can make an order setting aside a financial agreement if, and only if, the court is satisfied that one or more of the following matters apply:

 

  1. the agreement was obtained by fraud. This can include if there was non-disclosure of a material matter (this will most commonly involve failure to disclose a party’s assets and/or liabilities);
  2. a party to the agreement entered into the agreement to defraud a creditor, or, with reckless disregard to a creditor;
  3. a party to the agreement entered into the agreement to defraud or defeat a claim of another person who is in a relationship with the other party;
  4. the agreement is void, voidable or unenforceable;
  5. circumstances have arisen that make it is impracticable for the agreement or a part of the agreement to be carried out;
  6. since the making the agreement, a change in circumstances relating to the care of a child has occurred, and, as a result, hardship will be suffered if the court does not set the agreement aside;
  7. when making the agreement, a party to the agreement engaged in conduct that was unconscionable;
  8. a payment flag (stopping any payments being made from a superannuation fund) is in operation and cannot be terminated by a flag lifting agreement;
  9. the agreement covers a superannuation interest that is an unsplittable interest.

 

If a financial agreement is set aside, a court may, make orders in substitution for the agreement to divide the property and/or making orders for the payment of maintenance that the court considers just and equitable.

 

What happens if a party to a financial agreement dies?

A financial agreement that has not been terminated at the time of a party’s death continues to operate despite the death of a party and is binding on the estate of that party.

Can a party obtain an order confirming that a financial agreement is binding?

A party to the agreement can make an application to a court seeking an order declaring that a financial agreement is binding on the parties to the agreement.

 

How we can Baker Love Lawyers help?

 

It is essential that you have an accredited specialist in family law advise you when drafting a financial agreement. Every financial agreement should be unique and must reflect the specific circumstances of a relationship. If you require any advice and/or representation for the drafting of a financial agreement, please contact our firm and arrange a conference with Matthew Carney, an accredited specialist in family law on (02) 4944 3322.