You may have heard about prenuptial agreements in the news or via celebrity gossip as these types of agreements are often associated with wealthy and famous couples whose divorce settlements are the subject of tabloid news.
In the lives of regular couples, however, prenuptial agreements are also important. So, what are they and when should you consider getting one?
What is a Prenuptial Agreement?
A prenuptial agreement, also referred to as a ‘prenup’, is the most commonly known type of Binding Financial Agreement. It is entered into by people who are contemplating entering into a marriage with each other.
Binding Financial Agreements outline how each party’s assets, liabilities and superannuation including their joint assets will be distributed in the event they separate.
Does every couple need one?
The question here should really be, ‘does every couple want one?’, as sometimes only one person in a relationship wants one. Generally, if each party is interested in protecting their assets in the event they separate it is far easier to broach the subject before the event, rather than attempting to reach a settlement if the relationship becomes acrimonious post-separation.
Binding Financial Agreements are not just for the ultra-wealthy. They are also not just for young couples who are about to get married for the first time. De facto couples may enter into a Binding Financial Agreement. Often couples who have previously been married will want to enter into an agreement with their next partner as they understand the implications of not having entered into one during their previous relationship.
At what point in the relationship should we have an agreement drawn up?
Binding Financial Agreements can be made at various stages in relationships eg. before parties live together, before parties get married, during a de facto relationship or marriage and after the breakdown of a de facto relationship or after a divorce order is made for married couples.
Typically, there is a significant disparity in the financial circumstances of the parties and it is the party who is in a stronger financial position who will wish to protect their interests by entering into a Binding Financial Agreement.
What assets will be included in the agreement?
Both parties must provide each other with full financial disclosure before entering into a Binding Financial Agreement. The Agreement must set out all the assets, liabilities and superannuation owned by each of the parties including any jointly owned assets and liabilities.
Do I need to get legal advice?
It is a requirement of entering into a Binding Financial Agreement that you seek independent legal advice.
If you would like to have a Binding Financial Agreement prepared or you have been asked to sign one and need advice, contact our family lawyers in Cairns today.