Family Law Update: Pre-nups are not dead
From Hollywood to Business Moguls, we have all heard about pre-nups through movies and celebrity drama which often making it seem like the whole process is only necessary and available to the 1%. Whilst it is true that pre-nups, otherwise known as financial agreements, are about protecting your assets in the event of a break down in a relationship, meaning you need to have assets to protect in the first place, they are not only for the rich and famous! It is also not true that pre-nups can only be entered into prior to a marriage. In fact, financial agreements between spouses can be entered into at any time and regardless of whether the spouses are married or in a de facto relationship.
Any Financial Agreement entered into before, during or after a marriage or de facto relationship, when properly prepared and executed, can give parties some comfort about how their assets are likely to be divided (if at all) in the event of a separation.
Once signed, a Financial Agreement (including a pre-nup ) is and remains binding and enforceable unless the parties agree in writing to terminate it, or the agreement is set aside by the Court. Due to the strict binding nature of Financial Agreements and the difficulty in having them set aside, it is a legal requirement that both parties receive independent legal advice on the effects of the Agreement on their rights prior to executing same.
That being said, it is important to note that singing a Financial Agreement does not guarantee that you spouse will not make an application to the Court in the future in an attempt to set the Agreement aside, with a view to obtaining a larger property settlement or spousal maintenance package. Whilst there is no way of ensuring that a Financial Agreement is “watertight” (that is, to absolutely ensure there will be no future applications to have the Agreement set aside), however, as experienced and qualified family law practitioners, we will guide and advise you about the best way to protect your interests in the future.
In circumstances where one party does decide to apply to have a Financial Agreement set aside, the High Court decision of Thorne and Kennedy (8 November 2017) highlights that the overarching fairness of the terms of the Agreement may be one factor (amongst a number and range of factors) that may be taken into account if one party makes an application to set the Agreement aside.
The Court, in deciding whether or not a Financial Agreement should be set aside, may also look at factors such as whether the Agreement was offered on the basis that the terms were not open for negotiation (that is, on a “take it or leave it” basis), the nature of the parties’ relationship and their respective financial positions, the emotional circumstances in which the agreement was entered including any threat to end a relationship, engagement or marriage if the agreement is not signed and whether there has been time for the parties to carefully reflect and consider both the agreement and the independent legal advice they had received before signing the agreement.
In Thorne and Kennedy, the High Court was satisfied that the Financila Agreement in question should be set aside as it had been procured by undue influence and unconscionable conduct; that is the Wife did not enter into the Agreement of her own free will and she was under a special disadvantage (including by reason of circumstances created and exacerbated by the Husband) and it was wrong of the Husband to knowingly have her sign the agreement.
Like all aspects of Family Law, each and every Financial Agreement is unique to the parties who seek to enter into it and should be carefully and cautiously drafted and tailored to best meet those parties’ needs.
If you are interested in obtaining a Financial Agreement, or seek to have an existing Financial Agreement altered or set aside and wish to discuss your options with an experienced professional, please do not hesitate to contact a member of our Family Law Team, who will be happy to assist you with your enquiry.
