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Prenuptial Agreements for Married and De Facto Couples
Can I make a pre-nuptial agreement in Australia?
While “pre-nups” have been part of American life for a long time it is only relatively recently that they have been made part of Australian law.
Under these new laws, before marrying or living together in a de facto relationship (including same-sex relationships), couples are able to sign a written agreement setting out how their property will be divided up if they separate. This is commonly known as a Pre-Nuptial Agreement.
What if I don’t make a Pre-Nuptial Agreement?
Under the current laws when married couples, or couples who have been living together in a de facto relationship for more than two years (including same-sex relationships), decide to separate they may apply to the Courts for a share of whatever property is owned by one or both of them as at separation. If there is no Pre-Nuptial Agreement in place this can mean that a house owned by one person before they got together, a person’s business, or their superannuation, to give some examples, can end up being split between both of them. This can happen even if the other person did not put any money or effort directly into these assets or superannuation fund.
In some circumstances, particularly if the couple has had children together, the other party may even be given a greater share of the assets than the person who owned them to begin with. Unfortunately most people you talk to these days know of someone who feels very hard done by after going through this process.
The purpose of making a Pre-Nuptial Agreement is to avoid this happening.
Can I protect my house if I get married or start living with someone?
Pre-Nuptial Agreements can be especially helpful to couples if one or both of them is bringing significant property into the marriage or relationship that they do not wish to lose if they separate later on.
Pre-Nuptial Agreements may set out, for example, what happens to a house that one person already owns, to a person’s business, to a superannuation fund especially when the person has been working for a long time, to an inheritance or family assets (e.g. a holiday house owned with other family members), or to specific items of property such as jewellery or classic motor vehicles.
As well as dealing with existing assets the Agreement may specify how property that is acquired or improved during the marriage or relationship will be divided. This can be useful if the couple plans to pool their existing resources and buy a property together, particularly if one party is putting in more money or has a skill they intend to use to improve the property such as decorating or building work.
Pre-Nuptial Agreements are sometimes important where one party has a much higher income or is coming into the relationship with children whom the other party may have to support.
How can I make a Pre-Nuptial Agreement?
It is important to be aware that the law generally requires a particular form and wording that must be used if a Pre-Nuptial Agreement is to be valid. Failure to make the Agreement in the correct form may mean it has no effect down the track.
There may also be good reason to consider future events in a Pre-Nuptial Agreement rather than just dealing with the situation as at the time of making it. One obvious circumstance to think about is whether having children would change the way property would be divided up if there were a separation.
For these reasons it is always advisable to have a lawyer do the Pre-Nuptial Agreement for you.
If you would like a free 30-minute interview to discuss any of the above information please feel free to contact us.