Prenup – Andrews Family Law https://andrewsfamilylawyers.com.au Mon, 01 Jul 2024 10:17:07 +0000 en-US hourly 1 https://wordpress.org/?v=6.6.1 https://andrewsfamilylawyers.com.au/wp-content/uploads/2023/11/favicon-blue.svg Prenup – Andrews Family Law https://andrewsfamilylawyers.com.au 32 32 4 Tips for Financial Planning and Prenuptial Agreements https://andrewsfamilylawyers.com.au/financial-planning-and-prenuptial-agreements/ Sat, 29 Jun 2024 03:28:32 +0000 https://andrewsfamilylawyers.com.au/?p=6127

Marriage is one of the biggest steps a person will take in life. When two people decide to make a life together, finances are a significant factor. Before marrying, we advise you to understand financial planning and prenuptial agreements. Beyond immediate concerns like wedding expenses, long-term wealth planning is vital to establishing a solid foundation for a marriage. Here are four tips for securing your financial future before getting married.

Communicate your financial planning and prenuptial agreements goal

Couples should communicate about how they will approach financial planning after marriage. This means discussing financial goals, such as buying a house or saving for retirement. A married couple should be on the same page when making financial plans.

To achieve your financial goals both parties should be transparent about their financial situation and credit history. What assets and debts are they bringing into the marriage? What are your spending habits? Discussing these issues honestly will help start the marriage with an understanding of where you’re both coming from.

Learn more: 3 Ways to Resolve Financial Settlements During Divorce

Family planning for financial goals

Family planning should be carefully considered before getting married. Parents have many financial decisions. Obviously, the number of children you want is a key factor. Other relevant issues include whether you’ll opt for private education or public education, sports and other extra-curricular activities to involve your kids in, handling any medical expenses, and more.

Another part of family planning is organising your estate. You can protect your assets by drafting a will. Marriage automatically invalidates all existing wills made before the union. The only exception to this is wills that have an “in contemplation of marriage” clause. Both parties should consider how they would like to set up their will for their family’s financial wellbeing.

couple in kitchen of brisbane home sorting through finances.

Prenuptial agreement or not

A binding financial agreement (BFA) entered into before marriage is called a prenuptial agreement. They are a popular way of arranging for the division of marital property in the event of a divorce. While they may not be for everyone, they do offer financial benefits. A party who has significantly more assets than their spouse may wish to draft a prenuptial agreement to protect their property.

A BFA doesn’t need to cover the entire marital pool. It can cover specific assets that may be particularly important. This could include rare artwork, classic collectible vehicles, and the like. Some rare assets can be difficult to assess without a specialised valuation expert. A formal agreement ensures that these assets are handled in a way that’s agreeable to both parties.

Set financial boundaries for financial benefits

If you’re sharing a joint bank account, it’s often worth determining each person’s responsibilities when it comes to handling money. Is one person going to be in charge of staying on top of bills and purchasing necessities such as groceries? Also, consider making a financial plan to set down how you’ll make decisions around money. For example, you may want to make it a rule that if one person wants to purchase something worth over a certain amount, you discuss it first.

It’s also a good idea to save money in an emergency fund in case you need the financial support to cover a future debt. Speak with financial planners for further education on what your needs are regarding a suitable “rainy day” fund.

Conclusion on your financial situation

Getting married is a major commitment for many reasons. Joining your lives together comes with many considerations, not the least of which is how you’ll handle your joint finances. Money problems are one of the most common reasons for marriage breakdowns. However, you can ensure that your union has a stable financial foundation. This article has essential tips on how to approach your finances for a healthy relationship.

For assistance with property matters, our experienced team can help. Contact us today to set up a prenuptial agreement or any other family law matter.

If you need advice on consent orders, contact our office today.

Book a FREE Consultation

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]]> How to Split Assets in Divorce in Australia? (Legal Guide in 2024) https://andrewsfamilylawyers.com.au/how-to-split-assets-in-divorce/ Mon, 03 Jun 2024 19:07:20 +0000 https://staging.raw.com.au/?p=1164

It’s a common misconception in Australia that a divorce includes all aspects of separating, including the division of financial assets. Divorce is the process of terminating a couple’s marital relationship.

Who gets what in a divorce is determined by a separate financial settlement.

If you’re wondering how to split assets in divorce, it’s important to understand that the laws concerning divorce in Australia are covered under the Family Law Act 1975, which encompasses marriage, divorce, de facto relationships, guardianship, adoption and the care of children. 

How do you split assets during a divorce?

There are four options couples have when splitting their assets after divorce:

  1. A non-legal arrangement
  2. A binding financial agreement
  3. Consent orders; or
  4. Litigation

1. Non-legal arrangement

Non-legal arrangements are made when a couple splits amicably and can agree on dividing their assets without legal documentation. This kind of agreement does not prevent one of the parties from going to Court later to ask for financial orders under the Family Law Act.

These more informal agreements have advantages and disadvantages.

Advantages

  • Informal agreements offer a high degree of flexibility. Parties can negotiate terms that suit their unique circumstances. The Court applies no strict rules.

  • Avoiding the legal process can save significant amounts of money in legal fees. This is particularly beneficial if the parties are on amicable terms and can agree without legal intervention.

  • Reaching an informal agreement can be much quicker than going through the legal process.

Disadvantages

  • The biggest drawback of an informal agreement is that it’s not legally binding. If one party fails to adhere to the agreement, the other has limited legal recourse.

  • Without legal guidance, there’s a risk that one party may agree to terms that are not in their best interest. This is especially true if there is a power imbalance or lack of financial knowledge.

  • Informal agreements may not adequately address complex issues like property division or debt responsibility. This can lead to future legal complications.

ex partner talking to each other

How to make an effective non-legal arrangement?

Step 1: Communication

Begin with an open and honest discussion about what each party wants and needs from the financial settlement.

Step 2: Compile Financial Documents

Collect all relevant financial documents such as bank statements, property valuations, superannuation statements, and debt statements.

Step 3: Consider future needs

Think about the future needs of one or both parties. Does one party have a reduced earning capacity or limited access to financial resources? Also, think about retirement, education for children, health issues, and potential changes in living arrangements.

Step 4: Seek legal advice

Legal advice can help ensure fairness and understanding of legal rights and obligations.

Step 5: Draft the agreement

Write down the agreed terms. Include how you will divide assets, property, debt responsibilities, and any ongoing financial support.

Step 6: Review and revise

Ensure both parties agree with all terms. Be open to revising the agreement to address any concerns.

Step 7: Sign the agreement

While the agreement is informal, the parties should sign it. This creates a sense of commitment to the terms.

AFL - sad couple

Who gets what?

Informal agreements can divide property in any way the parties choose. This can make informal agreements risky as one party may not get their proper entitlement. Some considerations you might make include:

  • Agreements Made During the Marriage
    The couple may have had any agreements or understandings during the marriage regarding their finances and property division.
  • Legal and Professional Advice 
    Even for informal agreements, obtaining legal and financial advice is crucial to understanding the agreement’s rights, obligations, and implications.
  • Future Needs
    The agreement may consider the future needs of both parties. This includes factors like age, health, financial resources, care of children, and the ability to earn income.

Discover: 3 Ways for Resolving Financial and Property Matters

2. Binding financial agreements (BFA)

A binding financial agreement is a legal document that can be entered into before, during or after the relationship. When entered into before marriage, they are referred to as a prenuptial agreement. Binding financial agreements are final and enforceable. They essentially exclude the Court from overruling them unless there are exceptional circumstances.

How to form a binding financial agreement?

Step 1: Communication

Both parties should openly discuss their financial situations, objectives, and concerns regarding the agreement.

Step 2: Disclose finances

Both parties must make a full and frank financial disclosure. This may include bank accounts, stock portfolios and real estate. You must also factor in debts to understand the net asset pool.

Step 3: Seek independent legal advice

Each party must seek independent legal advice. This is a legal requirement for the BFA to be binding. The lawyers will explain the party’s rights and obligations under the agreement. The party should understand the advantages and disadvantages of entering into the BFA.

Step 4: Draft the agreement

One party’s lawyer usually drafts the agreement. The document outlines terms for asset division and any spousal maintenance arrangements.

Step 5: Review the agreement

The other party and their lawyer review the draft. Negotiations may take place to reach mutually agreeable terms.

Step 6: Sign the agreement

Once both parties are satisfied, the BFA is signed. The signatures must be witnessed by the lawyers who provided the legal advice.

Step 7: Independent legal advice certificate

Each lawyer must provide a certificate confirming that independent legal advice was given.

AFL - Prenuptial agreement 2

Who gets what?

When getting independent advice, your lawyer will advise you on whether the division is reasonable. Here are some considerations:

  • Practicality of the Division.
    The division should be practical. Consider the ease of transfer of assets, the ability of each party to manage certain assets, and the desirability of achieving a clean break to avoid ongoing financial ties. This might affect who receives the family home or gets responsibility for a share portfolio.
  • Superannuation Interests
    Superannuation is treated as property. Consider how superannuation interests should be split. Often, one party has less superannuation than the other. It may be appropriate for that party to get a share of their former partner’s super interest.
  • Effect on Children
    The impact of the property division on the welfare of any children is critical. Ensuring children have a stable environment and their financial needs are met is paramount. This means that the primary caregiver should receive a more significant share.

Learn more: What Is a Binding Financial Agreement?

3. Consent orders

A financial consent order is a legal document formalising the division of assets and financial obligations after a relationship ends. It’s approved by the Court, making it legally binding and enforceable, ensuring compliance with the agreed terms. This order can cover property, finances, and spousal maintenance but not child support.

How to apply for consent orders?

You must fill out an Application for Consent Orders. It is strongly advised to seek legal counsel before applying. Even the most amicable couples find the division of assets emotionally challenging. Having an experienced divorce lawyer will help you to understand the needs and rights of both you and your ex-spouse.

Before the Court will accept financial consent orders, it must be satisfied that the proposed property division is “just and equitable”.

Preparing for the requirements for a consent order

How assets are divided in Family Court?

Most people assume they are entitled to a 50/50 split of assets. However, several contributing factors are considered during property settlements, including physical and financial assets and liabilities. More often than not, a 50/50 split isn’t the fairest outcome.

You may have been led to believe that anything you own in your name only is yours, and anything you own jointly with your ex-spouse will be split between you. However, this isn’t always the case.

How assets are divided in a divorce has more to do with the contributions and needs of each person than whose name is attached to what item. This ensures one person isn’t disadvantaged.

For example, if one person were the children’s primary caregiver, they would likely have less financial stability or fewer retirement savings.

A four-step process calculates a just and equitable asset split under the Family Law Act.

  1. Valuation of assets
  2. Assessing the contributions of both parties
  3. Determining future needs
  4. Evaluating the impact
Step 1: Valuation of Assets

The first step of the process is to assess the assets and liabilities you and your ex-spouse have. This includes both those you have jointly and assets and liabilities you each have on your own. This step requires each party to fully disclose individual bank balances, the value of owned property or shares, outstanding loans and any interest in a business or company.

Assets and liabilities that must be considered in the pool include those acquired before, during, and sometimes after the relationship.

For example, if one of you already owned a property before entering the relationship, its value and associated debt will usually be included in the asset pool.

Similarly, any assets or debts acquired after the relationship ended will also be considered.

For example, this will be relevant if one person accumulates a large debt or spends a large sum of the couple’s money after the relationship ends.

Assets and properties

It’s essential to undergo this process with an experienced lawyer to ensure all assets and liabilities are accounted for, including any hidden assets or instances of one party hiding assets.

There may be some that you or your ex-partner have not considered, such as superannuation or a debt one of you owes to a friend. Sometimes, a partner may even attempt to hide assets from the process for an unfair advantage. You can prevent this by using a forensic accountant to examine the finances.

You may also feel entitled to 100% rights over an asset you acquired before the relationship. This may be the case, particularly if your ex-spouse made no contributions to the asset. However, all assets and liabilities must be thrown into the asset pool together at this first stage.

A fair and thorough assessment of all assets is essential, particularly when one party may uncover hidden assets. 

Step 2: Assessing the non-financial and financial contributions of both parties

This step is about understanding what each of you brought to the relationship. While the income of each party is included, not all contributions to a relationship are financial.

Financial contributions can include wages, government allowances, inheritance, dividends from shares or any other financial income you receive.

The most apparent non-financial contributions that need to be considered are being a caregiver of children and a homemaker. Others may also apply to your situation, such as renovating a property or even indirect contributions from family members.

These can include providing childcare, a deposit to purchase a property, or being a guarantor on a home loan.

Each of these contributions is assessed as a percentage or a range of percentages and compared against the asset pool to determine the first split of assets between the parties.

couple thinking about properties and investments

Step 3: Determining Future Needs

Now that all the assets, liabilities and contributions to the relationship have been assessed, your current and future needs must also be considered.

Several things need to be considered here for each person. These include their age, health, future earning capacity, employment prospects, and financial resources. Also, the Court will consider who will be responsible for looking after the children of the relationship, individual living requirements, and the impact the relationship may have had on each person’s earning capacity.

Access to support from family members, such as for childcare, living arrangements or financial support, may also be considered when dividing the asset pool.

assessing properties

Step 4: Evaluating the Impact

The final step in the process is for the Court to consider whether their split of the assets and debts is just and equitable to you and your ex-partner.

Some men believe they will be worse off in a financial settlement even if they have been the primary income earner in the relationship. This is usually untrue, as men are more likely to rebound quicker financially post-divorce than women.

This is often because women are the primary caregivers of children. Single older women are often most disadvantaged regarding their financial circumstances, particularly to their earning potential.

The Court may determine one person is given a higher portion of the assets if they have significantly less earning capacity.

This may seem complicated, so it’s important to seek the advice of an experienced property and family lawyer. They can simplify the process and ensure you receive what you’re entitled to.

financial and property matter resolution via litigation (1)

Related: Consent Orders Vs Binding Financial Agreements: What’s Best for You?

What to consider when dividing assets?

Remember that not only are assets split in a financial settlement, but debts are also. So, if one partner is given a more significant portion of the asset pool, they may also be given more debt obligations.

Counting assets and liabilities and considering contributions and future needs sounds straightforward. However, for most couples, this is a difficult process. It can be even more challenging for amicable couples who want to do right by one another and are unsure how to proceed without rocking the boat. 

A common challenge couples face is when they get fixated on a percentage they believe they deserve. While assets are rarely divided 50/50, there is no set percentage set down in Australia’s Family Law Act.

The split will be different for each couple. It’s better to focus on the goals and needs of each person to reach the fairest and most equitable settlement. Use percentage as a sense check rather than the end goal.

AFL - prepare for a consent order application

Litigation

Litigation is where the Family Court determines how the couple’s assets and liabilities will be split. This is the most lengthy and costly process. It usually requires attendance in Court.

This is generally a last resort option due to its emotional and financial impact on families.

What am I entitled to in a Divorce Settlement?

When getting divorced, you will want to know how much you are entitled to. There is no set percentage under Australian law when dividing assets. Determining how you should split your assets and liabilities can be challenging.

It will be different in each circumstance. While a 50/50 split is rare, you are more likely to end up with a 60/40 or even 70/30 divorce settlement.

The most common percentage split in the division of assets in Australia is 60/40. For many couples, one partner will contribute more financially, while the other may contribute more in caring for children and looking after the home.

In these situations, it is common for the financial contributor (often a male) to end up with 40% of the assets. The partner who contributed mainly non-financially (usually female) will get 60%. While this may seem unfair at face value, the Court makes adjustments based on the future needs of the individuals.

property settlement lawyers

The male likely has more earning capacity and income and is therefore deemed able to recover from the divorce more quickly than their ex-spouse. The partner (usually female) who contributed mainly non-financially to the relationship would be given 60% of the assets if they are likely to be the children’s primary caregiver post-divorce and their earning capacity is lower than their ex-spouse.

In this case, they would be awarded a higher percentage to address their future financial needs.

A 70/30 split in the division of assets is rarer. However, it can still be done. This usually occurs when the asset pool is large (over $10 million), and one partner contributed most of it.

You may also see a 70/30 split when one partner is in a hurry to finalise the settlement and may want to settle for less than they are entitled to. This is when it is essential to seek advice from an experienced divorce lawyer. They can negotiate for you and ensure you walk away promptly with what you’re entitled to.

Although financial settlement can be stressful, you must consider your current and future needs. Opportunities to reopen a financial settlement case are limited, and this may not always be an option available to you.

computing and assessing properties

It should be noted that the longer a relationship lasts, the less critical contributions are valued by the Court. It’s understood in most cases that over a long period, the contributions to the relationship would be more or less equal (whether financial or not).

This means that, in some cases, a 50/50 split is the most appropriate. An example could be a couple who have been together for a long time and are both retired. Or perhaps a couple where one partner was the sole financial contributor, but the other was the sole caregiver for children.

In short-term relationships, where assets were acquired only jointly, there are no children, and the couple earns similar incomes, a 50/50 split may also be the fairest division.

Are assets split 50/50 in divorce in Australia?

Most people think a 50/50 split of assets is the fairest outcome when they separate. However, this isn’t always the case.

Couples rarely settle on a 50/50 split. Under the Family Law Act 1975, there is no set percentage split, and every case will differ. That said, the most common division is a 60/40 split.

This usually occurs when one partner earns more while the other has more responsibility in looking after children post-divorce, has limited financial earning capacity, or has less superannuation.

Each party’s future needs and ability to support themselves are the main factors that sway the percentage split once all the assets and liabilities have been assessed. 

Do you need help with a divorce matter? We can assist you.

Contact us today!

Which assets are considered in a divorce?

It might surprise some couples what assets and liabilities are considered in a divorce. You often need to consider assets brought into the relationship, acquired both separately and jointly during the duration of the relationship, and even assets and liabilities gained after the relationship ended.

There are no set rules under Australian Law, and what is and isn’t considered can be decided on by the couple, the courts, or a combination of both.

Usually considered in the asset pool are:

  • Properties owned both individually and jointly
  • The respective income of each party
  • The superannuation of each party
  • Debts owing both jointly and individually

How long does a divorce settlement take?

The better you and your ex-spouse understand each other’s needs, the easier and quicker an agreement can be reached. If you agree on the division of assets, the settlement can take as little as two weeks to be finalised.

If there are disputes, the process can take a matter of months when settled outside of Court. If it needs to go to Court, a case may take up to three years to be resolved.

How can I protect my assets from divorce?

There are several ways you can protect your assets. One of the four options couples have when splitting their assets is a binding financial agreement, which can be entered at any time before, during or after your marriage.

When entered into before you get married, this is referred to as a prenuptial agreement. While some people think a ‘prenup is only used when the marriage is expected to fail, you can compare it to health insurance.

Most people don’t expect to fall ill. However, they still have health insurance. A binding financial agreement is a legal document outlining how assets and liabilities would be divided in divorce. It is final, meaning it can only be overruled by the Court in exceptional circumstances.

Prenuptial agreements can be particularly useful because they allow you to include clauses that protect things with future financial benefit. Those with significant estates will often wish to prevent any changes to the asset pool, both positive and negative, from being considered in a settlement.

For example, you may purchase a property or receive an inheritance post-separation, which you do not want to be considered in the asset pool. With the help of a divorce lawyer, you may organise a financial agreement that accounts for such eventualities.

Important: 3 Reasons Why You Should Hire a Family Lawyer

Can I get divorced without a financial settlement?

It’s a common misconception that divorce includes a financial settlement. Under Australian law, divorce and financial settlements are handled separately.

You can file for a divorce without a financial settlement. However, you may find you are entitled to more than you think. It’s also advisable not to wait until you have divorced to start dividing assets.

The reason for this is that post-separation, your asset pool may have changed. You may also have acquired more assets or received an inheritance, which may be divided between you and your ex-partner. Likewise, one of you may accumulate debt post-separation, which can negatively impact significantly.

Getting a divorce without financial settlement

If your divorce is finalised before your financial settlement, you will have 12 months from the date of your divorce to commence a property settlement application or have your agreement completed. If you wish to apply outside of this timeframe, you will need to seek permission from the Court to do so.

Compared to a financial settlement, filing for divorce is a straightforward process. As financial settlements are more complex, each party should seek independent legal advice to ensure you get what you are entitled to.

The division of assets may seem daunting. If you have an amicable relationship with your ex-spouse, you may want to opt for an informal agreement to prevent conflict or speed up the process to limit contact.

Can I get divorced before the property settlement?

Under Australian law, divorce and the division of assets are separate processes. You can finalise a divorce before reaching a financial or property settlement agreement. Conversely, you can get a property settlement before finalising your divorce.

Filing for a divorce is the process of two people separating from marriage and is done by completing divorce application forms and submitting them to the Commonwealth Courts Portal.

Read our blog here for detailed instructions on who can apply for a divorce and how to apply.

If you’re unsure if you can apply for a divorce or how to proceed, our experienced divorce lawyers can assist you.

Can a divorce settlement be reopened?

If you have reached a financial agreement but are unhappy with the outcome once it has been finalised, you can apply for a property adjustment. After divorce, your application for the adjustment must be made within 12 months of your divorce being completed.

If you do not apply within this time limit, you must obtain special permission from the Court.

signing of an agreement

Divorce Property Settlement Example

It’s human nature to seek out similar situations to understand what we should do and imagine what outcome we might expect. The Australian Government has supplied this case study in the Property and Financial Agreement and Consent Orders Guide issued by the Attorney-General’s Department.

Case Study

Drago and Constance are separating. They have been together for 15 years and married for eight years. Drago works full-time and earns $87,000 a year. Constance works part-time and makes $68,000 a year.

They have two children, aged 6 and 4. Using the negotiation guide, they arrived at the following negotiated property settlement proceedings and will seek a property consent order from the Court:

Joint Assets and liabilities

  1. A family home valued at $670,000 with a $250,000 mortgage. Net value: $420,000.
  2. Family car #1 Subaru Forester valued at $24,000 with a $12,000 loan. Net value: $12,000.
  3. Family car #2 Holden Commodore. Net value: $8,000.
  4. Furniture. Net value: $25,000.
  5. Joint savings account. Net value: $15,000.
  6. Westfarmers shares. Net value: $10,000.
  7. Joint transaction account. $1,200, with a $500 overdraft. Net value: $700.
  8. Joint credit card. $8,000 in debt.

Individual Assets and liabilities

  1. Drago Superannuation. Net value: $300,000.
  2. Constance Superannuation. Net value: $120,000.
  3. Drago savings account. Net value: $20,000.
  4. Drago boat. Net value: $5,000.

Identifying their contributions

Both Drago and Constance have worked throughout their relationship. Since having children, Constance has worked part-time to care for the children two days a week. She also takes the children to and from daycare and school.

While Drago and Constance try to share caring responsibilities for the children after work, Drago travels to work often. Therefore, Constance is often solely responsible for caring for the children.

They also both acknowledge that Constance’s ability to earn superannuation was limited by extended maternity leave and the fact that she has been working part-time.

Based on Constance having the majority of childcare responsibilities, she and Drago have agreed that the property should be split with an adjustment in Constance’s favour.

Considering the section 75(2) factors

Section 75(2) of the Family Law Act guides how the Family Court considers the division of property and spousal maintenance in a divorce. This section lists factors the Court must consider when determining what is just and equitable in property settlement and maintenance matters.

Drago and Constance are both in their late 30s and are likely to be able to work until retirement. They agree that the children should live at each of their houses and acknowledge that Constance will likely have significantly more caring responsibilities than Drago.

This will impact Constance’s ongoing ability to work full-time. They agree that the property split should be readjusted to reflect Constance’s lost potential earnings.

AFL - Lawyers

Conclusion

If you are going through a divorce and struggling on how to split assets, seeking expert guidance is important to ensure your rights are protected and you receive a fair settlement.

Andrews Family Lawyers can provide you with professional advice that is tailored to your specific needs.

If you need assistance with family law matters, Andrews Family Lawyers can help.

Book a FREE Consultation

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]]> What Is Prenup? (The Importance of Prenuptial Agreement in Australia) https://andrewsfamilylawyers.com.au/what-is-prenup/ Mon, 03 Jun 2024 05:12:41 +0000 https://staging.raw.com.au/?p=1178

No one enters into a marriage or partnership expecting it to fail. However, no one buys health or home insurance expecting to fall ill or experience a break, yet most people do the latter without question.

This article will explain what a prenup is, and how creating a prenup or binding financial agreement in Australian law can help you outline clear expectations with your partner about the division of assets.

Key takeaways

  1. Prenuptial agreements, commonly known as prenups, are legally binding documents that establish a framework for asset division in case of separation or divorce. 

  2. It is important to clarify that prenuptial agreements are not exclusive to the financially affluent. Rather, they can serve as practical tools that benefit couples from a variety of financial backgrounds.

  3. For a prenup to be legally binding, it must meet certain conditions, including full disclosure of each party’s financial situation.

  4. By specifying asset division in advance, prenups help avoid lengthy and expensive legal disputes during divorce proceedings, making the separation process smoother and more amicable.

  5. Prenuptial agreements encourage open communication about financial matters between partners, fostering a healthier, more transparent relationship foundation.

What Is Prenup (Prenup Agreement)?

A prenup or prenuptial agreement is a legally binding document under the Family Law Act 1975 that protects each party’s pre-marital or pre-relationship assets.

A prenup agreement is a legal log of each party’s assets and liabilities before entering the relationship. It then outlines how these assets may be divided in separation or divorce. To make the agreement legally binding, it must satisfy the following criteria;

  • Each party is to disclose their financial position, including assets and debts, fully;
  • The agreement must be put in writing;
  • Each party must have independent legal counsel before signing the agreement;
  • Each party must sign the agreement willingly.

Do Prenups Exist in Australia?

Yes, prenups exist under Australian law and are called binding financial agreements. They can apply to both married and de facto relationships and essentially exclude the Family Law Act from having any say in deciding how to divide assets and liabilities in case of a relationship breakdown. 

AFL - Prenuptial agreement 1

Learn more: What Is a Binding Financial Agreement?

Common Misconceptions About Prenuptial Agreements

Prenuptial agreements are often misunderstood. Many believe it is only necessary for the wealthy to signal a lack of trust or anticipate marriage failure.

However, prenups are practical tools that can benefit all couples, regardless of their financial status. It is like insurance, protecting the interests of both parties and creating a solid foundation for the relationship by fostering open communication about finances.

Prenups provide clarity and security for the future, and they are not about anticipating negative outcomes but about preparing responsibly for any eventuality. It can ensure peace of mind and strengthen the bond between partners.

Who Can Get a Prenup?

While prenups are usually associated with marriage, they can also be created for de facto relationships and apply to both heterosexual and same-sex couples. In other words, anyone can enter a binding financial agreement, provided both parties willingly agree to and sign the deal.

It’s also important to know that a couple can enter into a binding financial agreement at any stage of their relationship, including before getting married or entering a de facto relationship, during the relationship, and even after the relationship has ended, which is called a financial separation agreement.

Prenuptial Agreements Requirements

To make a prenuptial agreement legally binding, several requirements must be satisfied.

These include;

  1. Both you and your partner must receive independent legal advice from separate lawyers before signing the agreement. This advice must outline your specific rights as well as the advantages and disadvantages of signing the contract;
  2. The agreement must be signed by both you and your partner in the presence of each of your lawyers;
  3. The legal advice given to each party must come from a solicitor who is currently admitted to legal practice in Australia and
  4. Each respective lawyer must provide a signed statement to their client (each party, i.e. you and your partner) confirming that you each received independent legal advice.

It’s important to know that if these criteria are not met, your prenuptial agreement may not be binding and may be open to being void or challenged.

AFL - prepare for a consent order application

What Do Prenups Cover?

A prenuptial agreement can cover all financial aspects of each individual in the relationship, as well as shared assets and liabilities.

It can outline the separate assets, liabilities, and financial resources of each party obtained or accrued before you entered the relationship. This could include property owned, debts owed, and superannuation accrued.

It can also cover financial assets and debts acquired during the relationship, such as the family business, home or investment property, mortgages, car or personal loans. Finally, it can also govern if and what a

Benefits of Signing a Prenup

Creating and agreeing to a prenuptial agreement before entering into marriage, or at the start of a de facto relationship, allows both parties to amicably concur on how they might divide any assets should the relationship fail.

While these agreements are not always binding, they provide a legal basis for resolving property and financial disputes.

A binding financial agreement takes the guesswork out of divorce and separation proceedings by clearly stating who is entitled to what. It can also save you a lot of time and money, as if both parties disagree on who is entitled to what, the legal process can be drawn out and incur more significant fees or even court proceedings.

Some reasons you should consider entering a binding financial agreement:

  • A prenup allows you to protect your valuable assets, which is especially important when there is a significant difference in income or ownership of personal assets;
  • The agreement is not set in stone. You and your partner can agree to change or cancel a contract at any time;
  • The agreement can save significant time and money, with the division of assets finalised quickly in the event of separation or divorce;

AFL - organising of conset order application

To know more about the benefits of prenuptial agreements, check out our blog here.

Disadvantages of Signing a Prenup

In a relationship where one party earns significantly more than the other or does not work (a stay-at-home parent, for example), it’s essential to ensure that the prenuptial agreement outlines the value of what the non-working partner brings to the relationship or family.

The time spent caring for children, for example, is a significant contribution that needs to be included when considering the division of assets or the payment of spousal maintenance in a prenuptial agreement.

If a contract does not consider this, you may be disadvantaged if you do not receive what you believe you may be entitled to.

This is why it is imperative to seek the advice of an experienced family lawyer to help you understand what you may need to have included in the agreement.

AFL - Prenuptial agreement 2What Do I Need to Consider Before Entering a Prenuptial Agreement?

There are several things to consider before committing to a prenup.

Firstly, you need to consider how you are planning for the future. It’s important to remember that if a relationship never breaks down, a prenup never gets enforced.

By entering into a binding financial agreement, you and your partner prepare for the worst-case scenario without the emotion or stress of doing it during a breakup.

It’s essential to seek legal advice to discuss your situation because, if completed correctly, these agreements prevent the court from stepping in to divide your assets.

How To Arrange a Prenuptial Agreement

To make a prenuptial agreement legally binding, it must adhere to strict technical requirements and, therefore, be prepared by an experienced family lawyer. 

How Much Does a Prenuptial Agreement Cost?

There is no fixed price for filing a binding financial agreement in Australia, as it is prepared and reviewed by a second independent lawyer. 

Discover: 3 Reasons Why You Should Hire a Family Lawyer in Brisbane

Are Prenuptial Agreements Always Binding?

It’s important to understand that prenuptial agreements are not set in stone. There are several reasons a prenuptial agreement may be voided, so it’s essential to seek the advice of an experienced family lawyer to understand the risk of this in your situation and how this may be avoided.

Some reasons an agreement may be immediately voided include;

  • The agreement is found to be fraudulent (which could happen if you or your partner intentionally fail to disclose financial information);
  • Legal or technical requirements are not met, such as independent legal advice not received by one or both parties;
  • You or your partner were pressured into signing the agreement;
  • The agreement cannot be practically fulfilled.

AFL - Property Settlement 1

How are Prenups Enforced?

Due to the nature of a prenuptial agreement being a legally binding document, it essentially removes the Family Court from having a say in the division of your assets.

If you wish to dispute the agreement, you must seek legal counsel, and the matter will be taken to court. However, this does not guarantee it will be heard, let alone thriving.

Conclusion

A prenuptial agreement is a legal contract that defines how shared assets and debts will be divided in the event of a couple’s separation. It is not solely intended for affluent individuals but is recommended for all couples.

To ensure enforceability, strict legal requirements must be met. By predefining asset allocation, prenuptial agreements help avoid legal disputes and foster transparency and mutual comprehension between partners.

It is a practical measure to secure one’s financial future and strengthen the relationship.

If you need assistance with family law matters, Andrews Family Lawyers can help.

Book a FREE Consultation

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]]> What Is a Consent Order? (Why It’s Useful for Family Law Matters) https://andrewsfamilylawyers.com.au/what-is-a-consent-order/ Wed, 15 May 2024 15:42:30 +0000 https://staging.raw.com.au/?p=1145

Dealing with family law disputes can be challenging, and consent orders can be a helpful solution. But what is a consent order? 

This guide will give you the basics to move forward and address your legal matters effectively and confidently.

What is a Consent Order? 

A consent order is a legally binding agreement the court approves to formalise matters related to property settlements, parenting arrangements, or spousal maintenance following separation or divorce.

By agreeing to the terms and conditions of the order outside of litigation, parties can avoid lengthy court battles, reduce costs, and maintain greater control over the outcomes of their disputes.

A clear understanding of a consent order and how it fits into the process of resolving family law disputes can help reduce the stress and uncertainties associated with such proceedings.

AFL - consent order 1

The Legal Framework for Consent Orders

Understanding the legislative foundations governing consent orders and their role in family law dispute resolution processes:

1. Family Law Act 1975

Consent orders are governed by the Family Law Act 1975, granting courts the authority to make orders with the parties’ agreement regarding children, property, or spousal maintenance matters.

2. Court approval

Although the terms of a consent order are agreed upon by the parties involved, the order must be submitted to and approved by the court to become legally binding.

3. Legally binding

Once the court approves, consent orders have the same legal effect as court-imposed orders, meaning both parties must adhere to the agreed-upon terms or face potential legal consequences.

The Benefits of Consent Orders

Exploring the advantages of pursuing a consent order as opposed to engaging in potentially protracted litigation:

1. Cost savings

Consent orders can save parties substantial legal costs by avoiding court appearances and lengthy negotiations associated with litigation.

2. Time efficiency

As the parties agree upon the terms of the consent order, they can significantly reduce the time spent resolving their disputes compared to going through the court process.

3. Control over outcomes

Consenting parties can shape the terms of the agreement to suit their specific needs and circumstances, maintaining greater control over the outcome instead of relying on an imposed court decision.

4. Reduced conflict

Consent orders encourage cooperation and communication between parties, promoting a more amicable resolution and minimising conflict during the dispute resolution process.

AFL - consent order organised

Find out: Consent Orders Vs Binding Financial Agreements: Which is the Best for You?

The Process of Obtaining a Consent Order

An overview of the steps involved in drafting, negotiating, and lodging a consent order with the court:

Step 1: Negotiation and agreement

The parties must first negotiate and agree upon the terms of their consent order, often with the assistance of their respective legal representatives or through alternative dispute resolution methods such as mediation.

Step 2: Drafting the consent order

Once the terms have been agreed upon, consent orders must be drafted clearly and legally enforceable, typically by qualified legal practitioners.

Step 3: Lodging the consent order

Consent orders must be submitted to the court for approval and a signed Application for Consent Orders document. Parties should also include any supporting documents or evidence that may be relevant to their application.

Step 4: Court approval

Once lodged, the court will review the consent order to ensure the terms are just and equitable in property matters or the child’s best interests regarding parenting arrangements. If satisfied, the court will approve and legally bind the consent order.

When Consent Orders May Not Be Appropriate?

Recognising specific circumstances where consent orders may not be the best option for resolving disputes:

1. High levels of conflict

Consent orders rely on agreement and cooperation between the parties. In highly acrimonious disputes, where communication has broken down, reaching an agreement may be challenging or impossible.

2. Domestic violence or abuse

In situations where there has been domestic violence or abuse, consent orders may not adequately protect the victim, and court intervention may be necessary to ensure their safety.

3. History of non-compliance

If one party has a history of non-compliance with previous orders or agreements, consent orders may not provide sufficient enforcement mechanisms, and litigation may be more appropriate.

AFL-couple-sad (1)

Conclusion

Consent orders can be a powerful tool for resolving family law disputes more amicably and efficiently, while empowering the parties involved to take control of their outcomes.

By understanding the legal framework, recognising the benefits, and following best practices on the consent order application process, you can effectively navigate the family law dispute resolution process and protect your interests.

If you want advice with consent orders, Andrews Family Lawyers can help. 

Book a FREE Consultation

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]]> What Are the Benefits of Prenuptial Agreements in Australia? (Protect Your Assets) https://andrewsfamilylawyers.com.au/prenuptial-agreements-in-australia/ Mon, 29 Apr 2024 15:34:09 +0000 https://staging.raw.com.au/?p=378

In an era where financial independence and wealth accumulation have become defining features of individual success, asset protection is an issue of paramount importance. One such tool for asset protection, particularly in marriage, is a prenuptial agreement.

This legally binding document, better known as a ‘prenup,’ provides a safety net for your hard-earned assets, pretecting them against potential disputes or dissolutions in the future. However, a general lack of understanding surrounds Australia’s use and functionality of prenuptial agreements.

This article shows the benefits of prenuptial agreements in Australia. Whether it’s real estate, inheritance, business interests or personal belongings, a wellcrafted prenup can secure your financial wellbeing, even in the face of the uncertainty that relationships and marriages can bring.

What Assets Can a Prenup Protect?

A well-drafted prenuptial agreement provides a framework for dividing assets and liabilities in case of a relationship breakdown. The specific assets that can be protected under a prenup include:

1. Separate Property

A critical aspect of prenups is the distinction between separate property (pre-marital assets) and marital property (acquired during the relationship). By clearly identifying pre-marital assets, such as real estate, vehicles, personal belongings, or family inheritances, a prenup can ensure their protection from claims by the other spouse in the event of a divorce.

2. Retirement Accounts and Superannuation

Prenuptial agreements in Australia can also protect retirement accounts and superannuation interests, ensuring each party retains control over their investments.

3. Trusts and Estates

A prenup can protect interests in family trusts or estates by specifying each party’s rights and entitlements related to these assets.

4. Business Interests

If one or both spouses own a business, a prenup can shield these interests from claims by the other spouse.

AFL - properties

Learn more: What Is Prenup?

Benefits of Prenuptial Agreements in Australia

Apart from protecting individual assets, prenuptial agreements in Australia offer several additional advantages for both parties involved in the relationship:

1. Financial Transparency

Prenups foster transparency, ensuring both spouses understand each other’s financial circumstances before entering the marriage.

2. Conflict Minimisation

Prenups can help minimise potential conflicts during the relationship by clarifying financial expectations and establishing clear terms for the division of assets.

3. Faster and Cost-Effective Processes

In the event of a separation, a comprehensive prenup can simplify the asset division process and reduce the likelihood of lengthy and expensive litigation.

AFL - Prenuptial agreement 1

Key Factors to Consider When Drafting a Prenup

To ensure that a prenuptial agreement is valid and enforceable, it’s essential to consider the following key factors:

1. Full and Honest Disclosure

Both parties are legally obligated to provide full and honest disclosure of their financial circumstances, including all assets, liabilities, and sources of income. Failure to do so may lead to the court invalidating the prenup.

2. Independent Legal Advice

Before signing the prenup, each party must receive independent legal advice from separate lawyers. This ensures that both individuals understand their rights and the agreement’s implications.

3. Fairness and Equity

A prenup must be fair and equitable to both parties. If a court determines that the agreement is significantly unjust to one party, it may be set aside or altered.

4. Properly Drafted and Executed

It is essential to ensure that the prenup is properly drafted and executed according to the legal requirements in your jurisdiction. Engaging the services of an experienced family lawyer was essential in this process.

AFL - lawyers with clients

Related: What Is a Binding Financial Agreement?

Changes in Circumstances: Revoking or Amending a Prenup

While a prenuptial agreement is a valuable tool for protecting individual assets, it’s important to understand that life circumstances and priorities may change over time. As a result, prenups can be revoked or amended under certain conditions:

1. Mutual Agreement

If both parties agree to revoke or amend the prenup, they can execute a new written agreement that supersedes the initial prenup.

2. Significant Life Change

Major life events, such as the birth of a child, significant changes in financial circumstances, or the unexpected acquisition of an asset, may warrant reviewing and amendment of the prenuptial agreement.

It is recommended that you periodically review your prenup to ensure that it remains relevant and fair, given the ongoing changes in the lives of both parties.

equitable-distribution-comp

Common Myths and Misconceptions About Prenups

Despite the clear benefits of prenuptial agreements in Australia, some misconceptions may deter couples from considering this option. Let’s debunk a few common myths:

1. Prenups Are Only for Wealthy People

Although prenups are often associated with the wealthy, they benefit anyone entering a marriage or long-term relationship. By establishing clear financial expectations, they protect everyone, regardless of their income or assets.

2. Prenups Mean a Lack of Trust

Prenuptial agreements are often perceived as a sign that one spouse does not trust the other. However, prenups can strengthen relationships by fostering financial transparency and encouraging open communication about each partner’s financial expectations.

3. Prenups Are Inflexible

Prenuptial agreements are not set in stone and can be amended or revoked by both parties if their needs and circumstances change.

By understanding prenuptial agreements, couples can make informed decisions regarding whether a prenup is right for their relationship and ensure that their assets are safeguarded as they enter a new phase.

AFL - couple in law court

Conclusion

A prenup agreement is a legal document that can help protect your money and stuff if you get married or have a long-term relationship. It can help you and your partner talk about money things before you get married, so you both know what to expect and don’t fight about money later on.

A good lawyer can help you make a plan that works for you both. If you’re considering a prenuptial agreement, you can talk to the experts at Andrews Family Lawyers in Brisbane.

We can help you share property, decide what to do if you break up, and deal with family problems.

If you need assistance with family law matters, Andrews Family Lawyers can help.

Book a FREE Consultation

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