A reader asks: How valuable are prenuptial agreements? Are they legal documents that can be enforced by law?
How valuable are prenuptial agreements? Are they legal documents that can be enforced by law?
Many couples entering into marriage consider signing a prenuptial agreement in an effort to protect assets. Similar agreements can also be prepared for people entering de facto relationships.
These “pre-nuptial” agreements are known under the Family Law Act as Binding Financial Agreements. For such an agreement to be legal and enforceable, it must strictly comply with the Act. This includes a requirement that before signing it, each party must receive independent legal advice from a lawyer acting independently of their spouse/partner.
The Act also requires both parties to provide full and detailed disclosure about the nature and value of their assets and liabilities, so that each person can give informed consent to the agreement.
Even when the Act is strictly complied with, there can be circumstances when a court later decides to depart from the Binding Financial Agreement. This can include if the agreement is grossly unfair, if there are young children of the relationship, or if one person was forced into signing it.
For certain relationships, Binding Financial Agreements are extremely valuable, however given the complexities in this area it is always important to seek early legal advice.
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