Saying Yep to a Nup

Catchwords: Family law, binding financial agreement, property, spouse maintenance child maintenance incorporated, nup, prenuptial, postnuptial, change circumstances, non-disclosure material matter, set aside

Prenuptial and postnuptial “financial agreements” are now binding under the Family Law Act 1975 [Pt VIIIA-SS90B, C, D]. The changes came into force 27/12/2000. You can enter into a “nup” before marriage, during marriage and even after divorce, without any time limit, and they do not require Court approval or registration to be binding.

The changes encourage people to agree about how their property should be distributed in the event of separation and the breakdown of marriage. They can cover any or all of the parties’ pre-divorce property or financial resources and include maintenance. It is a way to avoid going to Court, costly legal proceedings and to eliminate much of the stress and trauma of a marriage breakdown.

Often the only way to pay for lawyers, in contested property proceedings, is by the sale of important assets. This can now be avoided. Particular assets and also financial resources can be preserved. These can include a farm, a family business, a home, and an inheritance, superannuation or prior marriage settlement. Assets can be kept aside, or used for the benefit of the children and not a new partner. There is no State duty or charge on a nup, nor on a deed or instrument for its purposes, so it suits estate planning.

Here are other positive benefits: the security of knowing how property will be divided in advance; more control over the outcome than a Court adjudicated one and at less cost; you can incorporate spouse and child maintenance into the agreement (although it must comply with the Child Support legislation and an assessment overrides it). If people make wills in the event of death, why shouldn’t they make “financial agreements” in the event of a breakdown of marriage?

With legal advice and a comprehensive financial agreement, prepared in accordance with Part VIIIA, the Court’s jurisdiction as to property and spouse maintenance in Part VIII is excluded. Otherwise the Court’s powers remain, although the agreement will be relevant. You can’t limit the power of a Court as to spouse maintenance, if one party at the time of signing was unable to support themselves, without an income tested pension. They are binding after death, upon the legal personal representative, whereas spouse maintenance orders and child support ceases.

The Court can set aside a financial agreement. Grounds include a non-disclosure of a material matter or fraud; if a purpose was to defeat creditors; if it is void, voidable or unenforceable (say undue pressure); if circumstances since make part of the agreement impracticable to be carried out; if there is a child and material circumstances change; and if it is unconscionable. You can go to Court to enforce them. You can mutually terminate them and enter into a fresh one, but not vary them.

There are compelling reasons, as an alternative to Court, for saying yep to a nup.

Jonathan de Vere Tyndall

Article updated 7 January 2015, originally published Find Law on 1 September 2004. Online copy here at Find Law.

Editors note: The articles published contain comment only and not legal advice, for which you should retain a solicitor. No responsibility is accepted for the accuracy of the contents.