Prenups: Their role in the Australian Family Law system

The Australian Family Law system does not recognise prenups in the traditional sense of being an agreement between parties before they marry. In Australia, prenups are called Financial Agreements which can be entered into at any stage of the relationship.

Financial Agreements can be entered into before marriage, in contemplation of marriage, during marriage but also after divorce. The Family Law Act also provides for a framework for financial agreements for couple who are in de facto relationships. Financial Agreements can relate to a specific aspect of the property of the parties or it can be set out to include all of the couple’s property, individual or mutual, and financial resources. In order for any Financial Agreement to be binding of the parties, it must conform to the rules of the Family Law Act.

A Financial Agreement is a Contract

The Family Court does not give any special treatment to Financial Agreement, they are regarded as contracts between two parties as any other agreement. Therefore, adherence with the principles of contract law is essential when drafting a Financial Agreement.

In the Case of Thorne v Kennedy [2017] HCA 49 the High Court held that a Binding Financial Agreement should be set aside, on the basis that the wife had entered into the agreement as a result of undue influence. This case reinforces that proposition that even if Financial Agreements are drafted to follow the specific rules of the Family Law Act it does not mean that they are inherently enforceable and valid.

Carefully drafted Financial Agreements can save parties time, stress and resources at the time of separation. Even if the parties do not have a binding Financial Agreement in place during the relationship, they can enter into one after separation or in the case the parties were married, after divorce without having to start Court proceedings for property settlement.

Three points to remember:

  • Financial Agreements can be entered into at any point before, during or after marriage.

  • De Facto couples may also enter into Financial Agreements at any stage of the relationship.

  • Financial Agreements have to adhere to the rules of the Family Law Act as well as the principles of contract law.


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