Postnuptial Agreements (Postnup)

In Australia, couples can enter into various types of ‘Financial Agreements’ to manage their financial affairs before, during, or after marriage.

These agreements are commonly known as ‘prenups’ when made before marriage and ‘postnups’ when made during marriage.

The formal term for these agreements is ‘Binding Financial Agreements.’

 

Types of Financial Agreements

 

Financial Agreements can be made in different contexts:

• Before marriage (Prenuptial Agreements)
• During marriage (Postnuptial Agreements)
• After marriage

Additionally, individuals in de facto relationships can enter into Financial Agreements:

• Before a de facto relationship
• During a de facto relationship
• After a de facto relationship ends

The legislation, requirements, and application for these agreements vary depending on the specific type of Financial Agreement.

 

Legal Requirements for Financial Agreements

 

For a Financial Agreement to be considered ‘binding,’ it must meet certain legal requirements. For instance:

• Each party must obtain independent legal advice before entering into the agreement.
• The agreement must comply with the relevant provisions of the Family Law Act 1975 (Cth).

If these requirements are not met, the Financial Agreement may later be deemed non-binding.

 

The Value of Postnuptial Agreements

 

A ‘postnup’ is an agreement entered into by married couples who wish to protect their individual assets, such as property or inheritances, in the event of a divorce.

With the high rate of divorce in Australia, postnuptial agreements can be an important consideration for couples.

 

Benefits of Postnuptial Agreements

 

The benefits of entering into a postnuptial agreement include:

 

Protection of Family Wealth

One party’s family wealth can be secured while allowing the couple to build joint wealth during their marriage.

 

No Court Involvement

The agreement is private and does not require court intervention.

 

Asset Protection

Sentimental or significant assets can be excluded from the marital property pool.

 

Certainty of Outcome

The agreement provides a clear outcome should the marriage end.

 

Marital Stability

It can help ‘save’ a marriage where one party has different spending habits, such as gambling.

 

Important Considerations

 

The law surrounding Financial Agreements in Australia is complex and it is essential to obtain legal advice to understand your rights and obligations under such agreements.

In the event of a party’s death, a Financial Agreement is terminated and cannot be relied upon by the surviving party.

Therefore, it is advisable to execute new estate planning documents, such as a Will, when entering into a Financial Agreement.

If you are considering a Financial Agreement, whether a prenup, postnup, or any other form, seek professional legal advice to ensure that the agreement is binding and meets all legal requirements.