The pre-nup or pre-nuptial is in Australia known as a Binding Financial Agreement (“BFA”). Do you need a pre-nup? What does a pre-nup do? Are there special procedures that need to be followed? What does a pre-nup cost?
You need a pre-nup because it is the only way to protect your assets in the event of a relationship breakdown. This applies both to married couples, and to de facto couples since March 2009. Your de facto has two years from the date of separation to make a claim on your assets if they can establish one of the following:
You lived together as a couple on a “genuine domestic basis” for two years; or
You have a child together; or
They made substantial contributions on your property and there would be serious injustice if they were not permitted to make a claim.
A pre-nuptial agreement is especially important for the spouse or partner that is better off than the other one. If you are going into a marriage or de facto relationship with any assets, or if your earning capacity is greater, you need to consider a pre-nup, more properly referred to under the law as a Binding Financial Agreement. The reason for this is that although you are given recognition for your superior contributions at the start of the relationship, in a property settlement, the value of your contribution will not automatically be awarded to you. The longer the relationship, the more contributions your partner can say they made to catch up to you, and the value of your contribution will be diminished. Not only that but also the person who has a lesser income and less earning capacity will receive a percentage adjustment in their favour, which further works against the high income earner. As the party that brought more assets in, and who had better earning capacity, you may even end up with what you consider to be an unjust result.
If you have already married, or are already in a de facto relationship, you can still enter into a Binding Financial Agreement, the sooner the better. Similarly, a Binding Financial Agreement can also be used to agree on and finalise the property side of the divorce or separation.
At Jano Family Law we can prepare a pre-nup Binding Financial Agreement for you, and provide you the required legal advice, for a fixed fee.