Let’s be honest, a prenuptial agreement can take the gloss off a romantic relationship.
Yet an experienced family law specialist in Canberra, who has been writing such agreements for more than 18 years, believes strongly in them for minimising risks and giving couples peace of mind.
DDCS Lawyers partner Phillip Davey says while they’re generally known as a ‘pre-nup’, a binding financial agreement can be entered into before or during a marriage or while in a de facto relationship. An agreement can even be used after a relationship ends as a means of documenting how a couple’s assets will be divided.
A family law and mediation specialist, Mr Davey says such agreements can be good for a relationship.
“Some people categorise them as a romance breaker. It can be a tough subject to talk about, but on the other hand, if you look at them as managing risk, and not having to worry about those issues, they can strengthen a relationship,’’ Mr Davey says.
“Rather than being in a situation where you are open to the vagaries of the court and litigation at 40 paces, you have a plan. You produce a document and say, right, this is how we do it.”
Prenuptial agreements are only as good as they are binding and, as a complex document, it takes care to ensure they are implemented correctly.
It’s possible an agreement can be found by the court not to be binding because it hasn’t complied with the technical requirements of the court, Mr Davey says.
A binding financial agreement must be in writing and must contain specific elements. Importantly, both parties must receive independent advice from a lawyer. And each lawyer has to sign a statement to certify that such advice was provided.
There are other situations where a financial agreement can be set aside, which are covered by the Family Law Act.
Firstly, the court looks to the circumstances surrounding the entry into the agreement. Like any other contract, it cannot be reached under duress, or as a result of unconscionable or misleading behaviour or non-disclosure of essential information. The court will be looking to see the agreement has been entered into freely by both parties.
The court will also look at whether there is a change of circumstances relating to children after an agreement has been entered into, and if there would be hardship to either a child or a carer as a result of the agreement being maintained.
Mr Davey says it is impossible to foresee into the future of a relationship, whether there will be children or changing financial circumstances. “A pre-nuptial agreement is not a silver bullet, or something that provides an absolute guarantee it will be upheld by the court at the end of the day,” he says.
Agreements work well for second relationships where couples have more certain financial circumstances, they have their assets, and are not having children together. It helps remove risks so a mature couple getting together have a clearer picture of what they are coming into the relationship with and what they need to be careful about.
“If both parties have children from former relationships, they are both motivated to be able to look after those children in the event their relationship doesn’t work,” Mr Davey says. “They want to protect the assets they are bringing in to the relationship.”
Binding financial agreements are also useful if someone is likely to inherit or receive money. Parents who want to help one of their offspring buy their first home might insist on an agreement to protect the asset if a relationship breaks down.
Mr Davey’s advice for someone in a financially advantaged position in a relationship is to avoid dreadfully one-sided agreements, because a former spouse is more likely to go over it with a fine-tooth comb to find ways to challenge it in court.
On the other hand, a reasonable and balanced agreement is more likely to achieve the desired outcome.
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