Understanding Australian Law

A prenuptial agreement, also known as a prenup, is a contract between two partners. The contract stipulates how the assets and liabilities will be divided in case a union or a relationship comes to an end in the future. Unlike other normal contracts, this agreement is purely based on the Family Law Act 1975 (cth). 

A couple can also enter into a financial contract before or during a marriage, prior to or during a de facto union, after a divorce or after a relationship ends. A prenuptial is also known as a Binding Financial Agreement.

Is prenuptial agreement legal in Australia?

A prenup is legally binding in the country, but it has to comply with the existing legal guidelines as stipulated in the Family Law Act. In addition, the agreement must be in writing. Before signing up for a prenup, both parties must receive legal counsel from a family lawyer. The lawyer must be a member of the Australian jurisdiction. The agreement also demands individuals should be free from coercion and not under the influence when signing up.

When does a prenup make sense?

In certain occasions, couples enter into this contract because they want to protect their assets and they are signing up when something such as a trust, a company, or inheritance is in question. Sometimes, in marriage or at the beginning of a relationship, one of the partners may have huge debts, and the other party does not want to be liable for the debts. 

As for the duration, a prenup doesn't say much, but most couples intend for it to remain effective forever. There are no laws about the duration of a prenuptial contract; hence it can be termed as indefinite. However, couples can still revoke the prenup if they want. They only need to write a secondary agreement, confirming the first contract is not in effect.

Times when a prenup is not valid

Certain prenuptial agreements contain sunset clauses, where parties agree on a date when the agreement ceases to be valid. Together with your spouse, you can agree that the contract will only be valid for 15 years. Alternatively, you can incorporate terms that stipulate that your individual properties become marital belongings after a given period.

All in all, prenuptial contracts are very effective at detailing how a couple should share and manage their properties in case a relationship ends. Also, it provides some form of guidance for the couple. Lastly, you should keep in mind that these contracts are not bulletproof, and they can be terminated when need be.