Can A Prenup Prevent Spousal Support in Australia?

Prenuptial agreements, also known as binding financial agreements, are becoming increasingly common in Australia. 

These contracts offer couples a way to plan for the possibility of separation or divorce. One key question couples often have is: can a prenuptial agreement prevent one spouse from receiving spousal support (alimony) after a relationship breakdown?

This article explores this issue within the context of Australian law.

Can a prenuptial agreement eliminate spousal support obligations?

While prenuptial agreements (known as Binding Financial Agreements or BFAs in Sydney) can significantly influence spousal support, here’s a breakdown of why they can’t always eliminate the possibility:

Yes, to an extent:

• Mutual Agreement: A BFA can set terms for waiving spousal support rights entirely, and these agreements would usually be upheld by the court if both parties willingly entered, had independent legal advice, and there was no evidence of fraud or coercion.
• Provable Financial Independence: If the spouse seeking support can demonstrate that they are financially independent, with sufficient assets and income to care for themselves, the court is more likely to honor a BFA waiving support.

No, not in all circumstances:

• Unfairness or Unjust Outcomes: Australian courts have the power to overturn or amend a BFA if they deem it would lead to a significantly unfair or unjust result for one spouse.
• Significant Change in Circumstances: If one spouse experiences a drastic, unforeseen change in circumstances (severe disability, inability to work), the court may disregard a spousal support waiver within the BFA.
• Hardship: Even with a BFA, if denying spousal support would leave one spouse in severe financial hardship, a court may still rule for some level of support.

Important Notes:

• Legal Advice is Crucial: Both parties must get their own separate legal advice before signing a BFA to fully understand their rights and potential ramifications.
• BFAs are Not Set in Stone: While BFAs are intended to offer certainty, Australian law gives courts some flexibility to consider extraordinary circumstances or unfair outcomes.

What factors can make a prenuptial agreement regarding spousal support unenforceable?

Prenuptial agreements are officially known as Binding Financial Agreements (BFAs) and can be made before, during, or after a marriage or de facto relationship.

These agreements can cover various aspects, including property division and spousal support (maintenance) in the event of a relationship breakdown.

However, certain factors can render a prenuptial agreement regarding spousal support unenforceable. Here are some key factors:

1. Improper Legal Advice: For a BFA to be legally binding in Australia, both parties must have received independent legal advice before signing the agreement. This advice must cover the agreement’s implications and the advantages and disadvantages at the time the advice was provided. If either party did not receive proper legal advice, the agreement might be deemed unenforceable.
2. Fraud or Non-Disclosure: If the agreement was entered into based on fraud, including the non-disclosure of assets or financial resources by either party, it could be challenged and potentially declared unenforceable.
3. Unfair or Unconscionable Conduct: Agreements that were entered into where one party exhibited unconscionable conduct (i.e., took advantage of the other party’s disadvantageous position) can be set aside. This includes situations where there was duress, undue influence, or unfair tactics used to persuade the other party to sign the BFA.
4. Change of Circumstances: A prenuptial agreement can be set aside if there has been a significant change in circumstances, particularly concerning the care of children, which would make the enforcement of the agreement cause hardship to a child or the party caring for the child.
5. Invalidity Under the Law: If the agreement has not been made following legal requirements or contains errors that affect its validity, it can be deemed unenforceable. This includes issues with the form of the agreement and compliance with relevant laws.
6. Impracticability: An agreement may become unenforceable if it is no longer practical to implement its terms due to changes in circumstances since the agreement was made.
7. Termination or Variation: If the parties have signed a subsequent agreement that terminates or varies the original prenuptial agreement, the original terms related to spousal support may no longer be enforceable.

It’s important for parties considering a BFA in Australia to seek comprehensive prenuptial agreement advice to ensure their agreement is valid and enforceable.

Legal professionals can help navigate the complex requirements and ensure both parties’ rights and obligations are clearly understood and fairly represented.

Does a prenuptial agreement have to be fair to be valid in the context of spousal support?

Yes, fairness is a crucial factor in the validity of a prenuptial agreement (or Binding Financial Agreement – BFA) in Australia, especially when it comes to spousal support provisions. Here’s why:

• The Power of the Court: Under the Family Law Act of 1975, Australian courts have significant discretion to set aside or modify a BFA if they determine it would lead to an unfair or unjust outcome for one of the parties involved.
• Focus on Fairness: When assessing BFAs, the court focuses on both fairness at the time of signing and fairness with regards to potential future outcomes. If a BFA seems fair on the surface but would likely leave one spouse destitute or without the means to care for themselves after a separation, it could be deemed invalid.
• Factors Impacting Fairness: Courts consider several factors when assessing fairness in spousal support:
  • Duration of the relationship
  • Income and asset disparity between the parties
  • Each party’s contributions (financial and non-financial)
  • Whether one party sacrificed career opportunities for the relationship
  • The presence of children and their needs

What happens if my ex-partner’s circumstances change after signing a prenup that waives spousal support?

Significant changes in circumstances after signing a prenup that waives spousal support can have a substantial impact on the agreement’s validity in Australia. Here’s how:

• Australian Courts Can Intervene:  The Family Law Act allows courts the discretion to set aside or modify a prenup (called a Binding Financial Agreement, or BFA) if enforcing it would result in severe hardship or an unfair outcome to one party.
• Examples of Significant Changes: Situations that might lead a court to reconsider a spousal support waiver could include:
  • Unexpected Disability: Developing a severe disability and the inability to work.
  • Becoming a Primary Caregiver: Taking on the primary role of caring for children or other dependents, limiting earning potential.
  • Major Loss of Income: Substantial job loss or business failure by the higher-earning partner.
  • Unforeseeable Financial Hardship: Circumstances leading to inability to provide for basic needs after separation.
• The Importance of the Specific Change: The significance of the change compared to the situation of the parties when the BFA was signed is key. For example, if both parties worked when the BFA was signed and one spouse later decides to be a stay-at-home parent, the court is less likely to overturn the spousal support waiver.
• Not Automatic Invalidation: A significant change of circumstances won’t automatically make a BFA unenforceable, but it will prompt the court to carefully reassess fairness and potentially renegotiate terms.

Can a prenup prevent spousal support?

While a BFA can include provisions for waiving spousal support rights, it’s important to recognise that such agreements can be overturned or set aside by a court for various reasons, including lack of independent legal advice, fraud, significant changes in circumstances, and undue hardship.

Given these complexities and the potential for future disputes, it’s advisable to ensure your agreement is drafted with the utmost care and legal expertise. At Justice Family Lawyers, we specialise in creating robust, legally sound prenuptial agreements that protect your interests.

Contact Justice Family Lawyers today to navigate the intricacies of BFAs and ensure your financial security and peace of mind.