Prenuptial agreements, also known as Binding Financial Agreements (BFAs) in Australia, are legal contracts couples can sign before entering a marriage or a de facto relationship.
These agreements set out how property, debts, and finances will be divided in the event that the relationship ends. While many people see them as a safety net, problems with prenuptial agreements can cause serious issues if not properly handled.
Some of the most common problems with prenuptial agreements include unfair terms, pressure to sign, and mistakes in how the agreement was prepared or signed.
If these issues exist, the agreement may not hold up in court. In Australia, courts can set aside prenuptial agreements that are found to be unjust, improperly made, or signed without proper legal advice.
What Are The Most Common Problems With Prenuptial Agreements In Australia?
Even though prenuptial agreements are meant to make things easier during a separation, they can often bring up challenges. Here are some of the most common problems people run into:
1. One person did not get independent legal advice
Australian law requires that both people involved in a prenuptial agreement obtain independent legal advice before signing. If one person did not talk to their own lawyer, the agreement might not be valid. The advice must be given before signing, and each person needs to understand their rights and the effect of the agreement.
2. One person felt pressured to sign
Sometimes, a person may feel pressured or rushed into signing the prenuptial agreement. This can occur, for example, if they are asked to sign it shortly before the wedding, or if they feel emotionally pushed by their partner. If a court finds there was undue pressure or duress, the agreement can be overturned.
3. The agreement is unfair or one-sided
If the agreement heavily benefits one person and leaves the other in a worse position, a court may find it to be unjust. This is especially true if the agreement does not consider future changes, like having children or a major illness.
4. Mistakes in the document or how it was signed
Even small errors—like not properly signing the document or not dating it—can cause major problems with prenuptial agreements. These small issues may lead a court to reject the agreement due to specific formality requirements.
5. Big life changes that were not considered in the agreement
A prenuptial agreement might not include terms about what happens if a couple has children, buys property, or one partner stops working to care for the family. If the agreement does not plan for these changes, it may be considered unfair later on.
Also Read: What is a Binding Financial Agreement in Australia?
Can Problems With Prenuptial Agreements Make Them Invalid Under Australian Law?
Yes, problems with prenuptial agreements can make them invalid under Australian law. The Family Law Act 1975 sets clear rules about how prenuptial agreements should be made. If those rules are not followed, the agreement might not be legally binding. Here are the key reasons a court might set one aside:
1. Lack of proper legal advice
Both people must receive legal advice from separate, qualified lawyers. Each lawyer must sign a statement saying they gave advice, and that statement should be attached to the agreement. Without this, the agreement may not be legally valid.
2. Duress or pressure to sign
If one person was forced, threatened, or unfairly persuaded into signing, the court may rule that the agreement is not fair. This is known legally as "duress" or "undue influence."
3. Fraud or dishonesty
If one person hides money, property, or debts when making the agreement, that is a serious problem. Failing to disclose all financial details can lead to the agreement being thrown out.
4. Unconscionable conduct
This is a legal term that means one person took advantage of the other in a way that is deeply unfair. For example, if someone used their partner's lack of education or emotional vulnerability to get them to sign, the court may not enforce the agreement.
5. Changes in circumstances
If something big changes—like one person becomes a full-time carer for children—and the agreement no longer protects their needs, a court may find it unfair to uphold. Courts look at what's fair today, not just what was fair when the agreement was signed.
How Do Courts In Australia Handle Problems With Prenuptial Agreements During Separation?
When couples separate, courts may be asked to decide whether the prenuptial agreement still applies. If one person challenges the agreement, the court will look at several factors to decide whether to enforce it:
1. Was the agreement made correctly?
The first thing the court checks is whether the legal rules were followed when the agreement was made. This includes independent legal advice, full disclosure of finances, and proper signing procedures.
2. Is the agreement still fair?
Even if the agreement was valid when signed, the court will ask if it is still fair now. For example, if the agreement gives nothing to a parent who stayed home to raise children while the other partner worked and built wealth, the court may set it aside.
3. Were both parties honest and informed?
Courts want to see that both parties were open and honest when creating the agreement. If one person lied or concealed information, the court will likely find the agreement is not valid.
4. Have circumstances changed significantly?
If things have changed a lot since the agreement was signed, the court may find it unfair to follow the original terms. For example, if someone became disabled or the couple had children, and those situations were not included in the agreement, the court may change how things are divided.
5. Does enforcing the agreement cause hardship?
Even when an agreement was made properly, if enforcing it would cause serious hardship to one person, the court may decide not to apply it. The goal is to make sure both people are treated fairly, especially after a long relationship or if children are involved.
Also Read: Binding Financial Agreement Advantages and Disadvantages
When Love Meets Legal: Be Prepared, Not Pressured
Prenuptial agreements can offer peace of mind, but only when they're made properly and fairly. The most common problems with prenuptial agreements in Australia come from rushing the process, failing to follow legal steps, or ignoring future changes in life.
If you are considering a prenuptial agreement—or already have one—it is wise to get legal advice to protect your interests. A well-prepared agreement can support both people fairly, while a poorly made one can create stress and legal battles down the line.
Need Expert Help With A Prenup Or Separation?
Thinking about a prenuptial agreement or worried yours may not hold up? Let Justice Family Lawyers help. Our experienced family lawyers can review, draft, or challenge prenuptial agreements to make sure your rights are protected.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
