What is a “prenup”?
A prenuptial agreement, or “prenup”, is a legal agreement between two individuals who plan to marry or enter into a de facto relationship. It is most commonly called a binding financial agreement or BFA.
The main purpose of a BFA is to set out how assets, debts, and other financial resources will be handled if a separation or divorce occurs.
Why would I need a BFA?
In Australia, BFA’s are recognised by law. In addition, they can be useful in a variety of situations. Below are key reasons why you might consider signing a BFA in Australia:
- Protecting assets: If you have significant assets before becoming de facto or before marriage, a BFA can help protect them if separation occurs. Without a BFA, the Family Law Act 4 step process may divide those assets.
- Clarifying financial expectations: A BFA helps both partners clarify financial expectations. For example, it can define how expenses will be shared and what each party keeps after separation.
- Avoiding legal disputes: A BFA sets clear rules for dividing assets and debts. As a result, it can reduce disputes and save both time and money.
- Protecting family businesses: If you own a family business, a BFA can protect it from division during separation.
- Protecting against spousal maintenance claims: If you earn more than your partner, a BFA can include terms relating to spousal maintenance.
What if things change after we sign the BFA?
“What if my partner and I signed a BFA and now we have changed our mind because we have a child together?”
Relationships often change over time. Therefore, BFA’s can also be amended if both parties agree.
If both parties consent, they have three options:
- Create a new BFA: The couple can create a new agreement reflecting the updated terms. This requires a new legal document and independent legal advice for both parties.
- Vary the existing BFA: The parties can change the existing agreement. However, this must be documented in writing and supported by independent legal advice.
- Terminate the existing BFA: The parties may end the agreement by mutual consent. After that, they can negotiate and sign a new agreement with legal advice.
Importantly, any changes must comply with strict legal requirements. Otherwise, the agreement may become invalid or unenforceable.
For this reason, both parties should obtain independent legal advice before making any changes.
Legal Advice
You should consult a family lawyer to determine whether a BFA is right for you. A lawyer can also confirm whether the agreement is legally binding and appropriate for your situation.
An experienced family lawyer will assess your circumstances and provide tailored legal advice.
If you are considering a Prenup or Cohabitation Agreement, our Gold Coast family lawyers can draft a legally sound agreement tailored to your needs.
To discuss your options, contact us today for a free and confidential initial consultation. You can book by:
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