Surprisingly defacto couples have been able to do this since 1984, but it has taken a few years for married couples to catch up and have the same opportunity.
These agreements can deal with what happens if things do not work out in the relationship leading to a separation.
Although the legislation has been around for more than 10 years, it has taken some time for the Courts to make some decisions on them and how they and the sections of the Family Law Act, that creates these agreements, will be interpreted.
We are finding these agreements are not suitable for all circumstances. For example If you leave the agreement to the week before the wedding, then it could be too late.
There have been a number of cases where the Courts have ruled that where the parties have entered into a pre nup close to the marriage, they are more easily able to be challenged.
This is because of the concern that there was undue pressure to enter the agreement, particularly on a spouse who may have been in a much weaker financial position than the other spouse.
These agreements are also not suitable where there is a degree of uncertainity in the couple’s future circumstances.
For example a young couple starting out, have the potential for lots of changes to occur in their lives and in their circumstances, so the agreements are usually not suitable because we cannot anticipate accurately what may happen in that time. Things like
• Will they have children and if so how many.
• If there are problems when will they occur, will it be a short relationship or longer.
• What happens if property that one partner brings into the relationship is sold and the partners then purchase property together in their joint names.
• What happens if one spouse makes substantial contributions to the property of the other spouse.
All these circumstances mean that the agreement cannot be drafted to meet all these contingencies. It is difficult to construct an agreement that is both fair and works in the years to come.
Pre nup agreements are generally best suited for older couples who are venturing into a long term relationship or marriage for the second time. For these type of agreements it is a little easier to anticipate future circumstances.
For couples remarrying, it can be a diplomatic nightmare when each spouse has children particularly adult children, of the prior relationship.
The agreements can give certainty as to how property is to be retained, even though their parent has ventured into a new relationship.
The agreements contain a history of the relationship at that time and a detailed account of what each spouse owns at the time of the agreement.
If one spouse is expecting to receive an inheritance, which has not taken place at the time of the agreement, the agreement can still provide that such an asset is excluded.
These agreements exclude the Court's involvement to decide property entitlements in any future dispute and so they should not be entered into lightly.
Due to the serious consequences, the Court requires that both parties have independent legal advice.
The agreements are construed strictly and if there are parts of the agreement that do not comply with the legislation, there is a real risk that they will be declared invalid.
There can be some other options available to give some certainty to these financial arrangements including the preparation of a will.
Sometimes just having an idea of your options can give some peace of mind.
Carolyn Munk is a partner at Matthews Folbigg Lawyers. Contact her at 02 9806 7478 or visit www.matthewsfolbigg.com.au
