Binding Pre-Nuptial Agreements

A bill to allow binding Pre Nuptial Agreements is currently before Federal Parliament. When passed, the Family Law Amendment Bill 1999 will allow couples to enter into binding financial agreements before, during marriage and after separation.

How will this change the current law?

Pre Nuptial Agreements are currently of limited effect as they are not binding. Whilst they may have some value in influencing the Family Court's exercise of discretion, they do not bind the Court in any way.

This is in stark contrast with the current law governing de facto couples. Under the South Australian De Facto Relationships Act 1996, de facto spouses have the ability to enter into binding 'Certificated Cohabitation Agreements'. Provided that the parties obtain independent legal advice and fully disclose all assets, the Certificated Cohabitation Agreement will govern the division of assets should the relationship break down.

The current legal position discriminates against married couples. Unlike their unmarried counterparts, they cannot self regulate their financial affairs. This situation is set to change with the introduction of binding pre nuptial agreements. Here is a quick summary of how the law will affect married couples and how it compares with the law that applies to de facto couples:

Married Couples

Current Law

The Family Court is not bound by Pre-Nuptial Agreements.

Proposed Reforms

• Couples will be able to enter into binding Financial Agreements before marriage, during marriage, or after separation.

• A Financial Agreement will only be binding if both parties have obtained independent financial or legal advice. This requirement is controversial in that it is an either/ or requirement. It may be the subject of amendment prior to the legislation being passed by the Senate.

• A Court will only be able to set aside a binding Financial Agreement in limited circumstances such as fraud, the agreement is void or unenforceable or where there are changes in the circumstances relating to the care of a child.

• The Family Law Amendment Bill 1999 is currently before a Legal and Constitutional Legislation Committee which is due to report shortly.

De Facto Couples

Current Law

• Couples entering into or in de facto relationships have the ability to enter into binding cohabitation agreements under the De Facto Relationships Act 1996.

• To be binding, the parties must disclose all assets and must obtain independent legal advice.

• A Court cannot set aside or vary a Certificated Cohabitation Agreement if the Agreement excludes the Court's power to do so. This means a Certificated Cohabitation Agreement can only be varied by a further Certificated Agreement.

What happens if a de facto couple does not enter into a Certificated Cohabitation Agreement?

A couple without an Agreement loses the opportunity to specify how their property will be divided in the event that their relationship comes to an end.

After a de facto relationship ends, either of the de facto partners may apply to a State Court under the De Facto Relationships Act for a division of property.

However, a de facto partner can only apply if:

1. either partner is resident in South Australia when the application is made; and
2. the de facto partners were resident in the State for the whole or a substantial part of the relationship; and
3. the de facto relationship existed for at least 3 years or there is a child of the de facto partners.

There is a time limit on applications to the Court by de facto partners. These applications can only be made within 12 months of the end of the de facto relationship. This time limit will only be extended in cases of serious injustice.

How will the Court divide the De Facto couples property?

Here are the matters that a Court will consider in dividing up the property of a de facto couple:

• Financial and Non Financial Contributions to property and financial resources
• Homemaking or parenting contributions
• The terms of any relevant Cohabitation Agreement
• Any other relevant matters.

Free Information Sessions

Norman Waterhouse regularly conducts Information Sessions on all areas of Family Law at no cost. Please contact Jill Miller or Brendan Murray if you, your staff or your clients are interested in attending. Information Sessions are generally conducted at our offices however we would be delighted to consider arranging a session at your office upon request.

For further information on this article, please contact Jill Miller, Associate on (61 8) 8210 1239 or via E-mail: jmiller@normans.com.au.

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