When preparing for a wedding, the last thing most people are thinking about is what happens if we get divorced. With all the love and excitement in the leadup to the big day, most people are rightfully focused on their happy married life rather than an unhappy divorce.
But there is an old saying: Nobody plans to fail, but many fail to plan. This is a great way to think about a prenuptial agreement. As the Australian divorce rate continues to grow, it’s a good idea to plan for this eventuality, even if you think it will never happen to you.
And with people getting married later in life, individuals are bringing more savings and assets into their marriages. And this is where a prenuptial agreement is valuable.
What is a Prenuptial Agreement?
A prenuptial agreement (or prenup as it’s generally known) is a binding financial agreement that outlines the responsibilities and rights of a couple in the case of a separation or divorce.
A prenup is most commonly used to outline how assets, property and finances will be distributed in the case of a divorce. They are also used to clearly lay out non-financial rights such as custody and visitation rights and other legal responsibilities.
Most often, a prenup is not prepared with an eye towards divorce. They are intended to provide security, certainty and peace of mind by ensuring the division and distribution of assets is agreed on ahead of time.
For a prenup to be legally binding it must:
- Comply with the Family Law Act
- Be in writing
- Be freely agreed to by each party after receiving independent legal advice
- Contain a full disclosure of each person’s financial standing
Why is a Prenup Important?
A separation or divorce can be a painful and stressful time. Without a prenup, a divorce can end up bogged down in protracted legal disputes over the division of assets and the responsibilities of each party.
With Australians generally getting married later in life, people are entering into relationships with more assets to protect. This can increase the complexity and difficulty of divorce proceedings.
However, with a prenup, there is an agreed-on division of assets and legal responsibilities that will simplify any potential divorce proceedings and save you money and heartache.
A prenup will help to prevent time-consuming and expensive litigation in the case of divorce. It will clearly identify ownership of assets brought into the relationship as well as assets acquired during the relationship and it identifies and protects business interests and legal rights and responsibilities.
Finally, a prenup provides peace of mind. You can rest easy knowing that the tough financial decisions have already been made and each person’s assets are protected.
When should you get a Prenup?
Contrary to popular belief, prenups do not necessarily need to be signed before a wedding. They can be entered into at any stage of any relationship including before or after a marriage, after a breakup, or at any stage of a defacto relationship.
Who should get a Prenup?
A prenup can be useful for anyone entering into or currently in a relationship, including already married couples, de facto partners, couples considering marriage and same sex couples.
However, they can be particularly beneficial for the following groups of people:
- People entering into a second marriage
- People with children from previous marriages
- People with high net worth or significant assets that they want protected
- People with significant debts/liabilities or criminal backgrounds
- Couples employing asset protection strategies
Do they work?
In most cases prenups are legally enforceable. However, there are some situations where a prenup may not be legally binding. A prenup can be overturned in court for a variety of reasons such as:
- The agreement not making provisions for future children in the relationship
- One or both parties failing to fully disclose their financial standing
- One person feeling they were coerced or pressured into signing the agreement
- If the agreement was entered into at the last minute as a condition of marriage
- If the agreement is not just and equitable
At the end of the day, a prenup will not be necessary in all situations. If you want to find out if a prenup is right for you, then speak to a reputable family lawyer today.