Are Prenups Legal in Australia?

Prenuptial agreements are a completely valid way of cementing an agreement between two parties ahead of their marriage.

When it comes to creating a legally binding agreement between two parties ahead of their marriage, prenuptial agreements are becoming increasingly popular in Australia.

But how valid are they? Our prenup lawyers have years of experience in family law and we’re here to help untangle the legality of pre-nuptial agreements in Australia.

Prenuptial Agreement Definition

Simply put, a prenuptial agreement (or a prenup, as they’re often called) is an agreement agreed upon by intending parties before their marital union, which outlines the rights and responsibilities of each person in the event of a separation or divorce.

Prenups detail arrangements regarding property, finances, and superannuation post-separation.

The Validity of Prenup Agreement

For a prenuptial agreement to be considered valid, some steps must be taken beforehand.

1. Both parties must seek independent legal advice before the agreement is signed, to ensure the contents of the document are fair and reasonable.
2. Both parties must also provide full and honest disclosure of their respective financial positions.
3. Finally, the agreement must be drawn up in a way that all involved parties have read and understood the contents.

Section 90G of the Family Law Act governs what provisions must be fulfilled to have a prenuptial agreement valid.

Prenuptial Agreements Effectiveness

For a prenuptial agreement to be effective, you need to understand how your finances will look in the future.

This can be a tricky situation, and it is best practice to update your prenup whenever there is a significant change in circumstances in your relationship.

For example, if you have children or have a dramatic change in your health or financial circumstances.

This agreement must also be entered into in good faith with both parties understanding the contents and circumstances in which the agreement was made.

This means that agreements that are obtained through undue pressure, fraud, or by hiding or misrepresenting assets or information could be rendered invalid.

Invalid Pre-nuptial Agreement

Under the Family Law Act 1975, the law stipulates when a prenuptial agreement is invalid if any of these circumstances are met:

(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:

(a) the agreement was obtained by fraud (including non-disclosure of a material matter); or

(b) the agreement is void, voidable or unenforceable; or

(c) in the circumstances that have arisen since the agreement was made it is impracticable for the agreement or a part of the agreement to be carried out; or

(d) since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or

(e) in respect of the making of a financial agreement–a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or

(f) a payment flag is operating under Part VIIIB on a superannuation interest covered by the agreement and there is no reasonable likelihood that the operation of the flag will be terminated by a flag lifting agreement under that Part; or

(g) the agreement covers at least one superannuation interest that is an unsplittable interest for the purposes of Part VIIIB.

Some of these clauses are quite general and vague in anture, so we have specific case law that explains what the courts mean by words such as “obtained by fraud”.

For specific advice about your prenuptial agreement, it is best to speak to an experienced family lawyer.

Dealing With Disputes and Prenuptial Agreements

In the event of a dispute, couples should seek legal advice to work out if the prenuptial agreement is enforceable. Couples should also be aware that the court has the power to make changes to a prenuptial agreement if they consider it to be unfair or outdated.

This is particularly common if circumstances have changed since the prenuptial agreement was drawn up, such as if one partner is unable to maintain employment or if children are added to the family.

In this situation, candidates can ask the court to modify or set aside the prenuptial agreement if circumstances have changed significantly. Courts may also invalidate an agreement for a number of reasons, such as if one party withheld information, or if there was any duress or fraud.

Challenging a Prenup

Yes, a prenuptial agreement (also known as a Binding Financial Agreement in Sydney) can be challenged in Australia. However, there are specific grounds and a fairly high bar to clear in order to successfully set aside a prenup.

Here are the common ways that a prenuptial agreement may be challenged in Australia:

• Failure to Follow Procedural Requirements: Prenups must follow strict legal guidelines to be considered valid. These include:
  • Both parties must have received independent legal advice before signing the agreement.
  • The agreement must be in writing, signed by both parties, and witnessed.
  • Lawyers for each party must provide a statement certifying they provided independent advice about the consequences of the agreement.
• Lack of Full Financial Disclosure: Each party must fully and honestly disclose their assets, liabilities, and financial situation. Concealment of significant information could lead to the agreement being overturned.
• Unfairness or Unconscionable Conduct: If the court determines the prenup’s terms to be significantly unfair to one party or if unfair conduct (like duress, undue influence, or one party taking advantage of the other’s vulnerability) is involved, the prenup might be challenged.
• Change of Circumstances: If there’s been a significant change in circumstances since the prenup was signed (e.g., birth of a child, a party becoming disabled), the court may deem the agreement no longer fair or relevant.

Prenup Validity After 10 Years

Binding Financial Agreements (BFAs), including prenuptial agreements, do not have a fixed expiry date. They remain valid indefinitely unless certain conditions are met:

• Sunset Clause: If the agreement contains a specific “sunset clause,” it will cease to be valid on the stipulated date.
• Successful Court Challenge: A BFA can be set aside if a court determines it was procedurally flawed (e.g., lack of independent legal advice), unconscionable (significantly unfair to one party), or if there was undue influence or duress during its creation.
• Material Change of Circumstances: Significant changes since the BFA’s signing, such as children’s birth or a party’s disability, could render the agreement unfair. The court may decide in such cases that the BFA is no longer applicable.

Important Considerations:

• While BFAs don’t automatically expire, the passage of time is a factor the court may consider when assessing a challenge. A long-standing agreement may be harder to overturn.
• Periodic review of BFAs is highly recommended, especially when significant life changes occur. This ensures the agreement remains aligned with both parties’ financial circumstances and intentions.

Making Sure Your Prenuptial Agreement is Valid

At Justice Family Lawyers, we understand the importance of entering into a valid prenuptial agreement.

We have a team of experienced family lawyers who are on hand to help with your prenuptial agreement.

No matter what stage in the prenuptial agreement process you are in, don’t hesitate to get in contact with us. We’re here to change the way Australians seek legal help, so if you’re wondering how valid are prenuptial agreements in Australia, our team of experienced family lawyers can provide you with the support and tailored advice you need.