Postnuptial agreements in Australia: 6 important things to know
A postnuptial agreement in Australia is a binding financial agreement (under section 90C or 90UC of the Family Law Act 1975) where a couple can formalise an agreement outlining their current financial position and circumstances and considers what would occur in the event a separation takes place.
Similar to a prenuptial agreement (known as a binding financial agreement in Australia), a postnuptial agreement is entered into during a de facto relationship or after marriage rather than before marriage or de facto relationship starts. Following a separation, you can enter into a post-separation agreement.
These types of binding financial agreements are becoming more common in Australia, particularly over the last few years. We have seen these preferred in older couples entering a new relationship after their previous marriage or relationship has ended.
Below, we set out all you need to know about postnuptial agreements in Australia.
What is a postnuptial agreement?
In layman’s terms, a postnuptial agreement is essentially a “prenup after marriage.”
This type of agreement will allow you to document and formalise a binding financial agreement during your marriage or de facto relationship in the event of a breakdown of the relationship or marriage. The agreements include setting out the property settlement provisions and spousal maintenance considerations in the event of a separation, divorce or upon a death of a party.
When to enter into a postnuptial agreement
After your marriage or as your de facto relationship continues, you can enter into a postnuptial agreement. In the early stages of a relationship, it’s not uncommon for couples to feel comfortable discussing financial matters nor to enter into a financial agreement prior to getting married.
However, following a marriage or de facto relationship, you can consider entering into a postnuptial agreement as financial circumstances change throughout their relationship. You can also enter into this binding financial agreement to simply review and update your prenuptial agreement to ensure it is up to date.
What is included in a postnuptial agreement?
Generally, a postnuptial binding financial agreement will include you and your partner’s financial circumstances (income, assets, liabilities) at the time of entering into the agreement, and provides what is to occur in the event of a separation. Usually, this can be:
- the division of jointly held assets;
- the ownership of assets that were held prior to entering the agreement;
- spousal maintenance; and
- any intentions around gifts or inheritance that might be received by them during the marriage or relationship.
Why enter into a postnuptial agreement?
Like most important things in life, it is important to protect them where we can.
These agreements provide certainty and security in the event there is a breakdown of the marriage or relationship. During a relationship, circumstances can easily change which might call for entering into a postnuptial agreement to protect each other’s assets. For example, you or your partner might receive an inheritance, a large sum of money, significant gifts or loans provided by family. If you or your partner does receive a gift or loan, it can be protected in these agreements.
You or your partner might also include considerations to involvement in a family business or trust to protect themselves of that ownership. These agreements ensure in the event of a separation, you and your partner can ensure that your assets go to your children and can protect your estate.
Finally, although many of us have cherished pets that are like children and family to us, Australian law views them as property. With this binding financial agreement, you’ll be creating certainty about who gets the dog if the situation ever arises.
How is it legal and binding?
Under section 90G (or 90UJ) of the Family Law Act, a postnuptial agreement in Australia is binding for both parties if:
- The agreement is in writing and signed by both parties,
- Prior to signing the agreement, both parties were provided with independent legal advice from a lawyer in relation to the advantages and disadvantages of the agreement,
- That lawyer, for both parties, signs the statement as having provided the independent legal advice,
- The signed statements by both lawyers are provided to each party confirming such advice having been given, and
- The agreement had not been terminated or set aside by a Court Order.
Discussing it with your other half
Just like general prenups, you might struggle to discuss “prenups after marriage” with your partner, as it might seem like it creates doubt or distrust that your relationship or marriage will last. However, these conversations are in both of your best interests. These agreements plan for the worst-case scenario to avoid lengthy and expensive delays following a separation in negotiations or through the litigation process.
Interested in entering into a postnuptial (or prenuptial) agreement? Sound legal advice is recommended. Give our friendly team a call directly or request a call back touch via the form below.
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