The colloquially referred to 'pre-nup' is properly known as a Financial Agreement under Australian law. Financial Agreements are available to all Australian couples, including de facto and same sex, to document arrangements in relation to their financial affairs and the division of assets in case you and your partner decide to go your separate ways at a later date.
Financial Agreements can be created at any time, whether prior to moving in together or during a de facto relationship as well as after separation. The Agreement records your intentions as a couple regarding how all or some of your assets and financial resources will be divided in the event that you separate. For example, you might agree that each of you will retain the property that you brought into your relationship, or you could use a Financial Agreement to protect an inheritance that one of you knows you will receive during your relationship.
Financial Agreements can also cover spousal maintenance obligations, for example, you can choose to exempt each other from any maintenance obligations in the future altogether. Agreements that are created before you start living together or during your relationship as a de facto couple can also address how you will deal with you finances during your relationship, such as who will be responsible for the payment of certain expenses.
The preparation of a Financial Agreement is a technical process which requires a high degree of legal expertise, as they must comply strictly with certain legal provisions in order to ensure the Agreement is binding and legally enforceable. Both you and your partner will be required to obtain independent legal advice about the Agreement prior to signing.
Once a valid Agreement has been properly executed it removes a Court's ability to determine a property settlement and maintenance matters on behalf of you and your ex (except in very limited circumstances); instead the terms of the Agreement will prevail. Having a Financial Agreement means that you and your partner can have certainty as to what will happen to your assets if you were to separate in the future and to avoid a lengthy and potentially costly legal dispute.
Financial Agreements should be considered by people who wish to protect their current assets or assets that they may acquire during a relationship, such as a large inheritance. They can also protect one party from having to pay maintenance to their former partner if, for example, there is a large income disparity. They are also useful when used in conjunction with other asset planning documents, such as wills and trusts, and when considering how to safeguard assets which are intended to pass to children or future generations.
Sarah Wainwright, Senior Associate
+61 3 9269 9706
Rachell Davey, Special Counsel
+61 3 9269 9126