Binding Financial Agreements (‘BFAs’), also known as pre-nuptial agreements, allow couples to protect their individual assets and debt liability, and opt out of having their property settled by court orders, should their marriage, or de facto relationship, end.
However, the case of Hoult & Hoult (2013), confirmed that unlike other Family Law remedies, such as separation and consent Court Orders, BFAs will not be set aside solely because they are unfair or unjust to one party. Instead, BFAs operate similarly to contracts by binding parties to their agreed terms, even if it were a very unfair deal. Consequently, the very nature of these agreements means that they often significantly favour one party over the other.
As a result, before entering a BFA, s 90G Family Law Act 1975 requires you to seek independent legal advice to consider the advantages and disadvantages of a BFA, prior to signing it. As seen in Thorne v Kennedy , this law also operates to protect you from undue influence or unconscionable conduct, which would enable a court to set aside your BFA. This principle was part of the basis for an application to set aside a BFA in Frederick & Frederick . However, the trial judge found that the mere fact the applicant was concerned her partner would end the relationship should she refuse to sign the BFA does not constitute undue influence or unconscionable conduct.
Despite this, the appeal of this case, Frederick & Frederick , illustrates a caveat of this principle. Set out in section 90K(d) Family Law Act 1975, courts may overturn BFAs where circumstances have changed to such an extent it would cause one parent hardship, should the BFA not be set aside. As seen in Frederick, changes such as having a child since signing the agreement, particularly with a disability, will likely cause hardship to the parent with lesser assets.
Therefore, while your personal circumstances at the time of signing the BFA may not be relevant when the court considers whether to set it aside, changes to these circumstances may play a role, should the validity of the agreement come into question. Therefore, it is important to seek good legal advice to protect both your financial position in the present and future.
Our specialist law team at Sanicki Lawyers has the necessary skill and experience to prepare a BFA which considers a wide variety of circumstances tailored to your personal situation. Further, we can advise you on whether a BFA is in your best interests to protect your financial position in the event of relationship breakdown.
So don’t delay – contact Stephanie Hope, Senior Associate Family Lawyer and Head of Family Law at Sanicki Lawyers for legal advice and representation today, by calling 03 9510 8999, or emailing email@example.com.