In the post engagement glow, most couples are happily retelling the proposal story or planning the details of their wedding day. Perhaps the last thing they think to discuss is whether to get a financial agreement, but should they?
Pre-nuptial Agreement Defined
A financial agreement, colloquially known as a pre-nup, is a legal contract entered into by a heterosexual or same sex couple, before entering a marriage or civil union. The agreement details how the couple’s assets and liabilities will be dealt with in the event of a relationship breakdown or divorce. The agreement can also specify whether spousal maintenance will be provided following the separation. Other issues, such as arrangements for the care and financial support of children, are not covered by these contracts.
Why Consider a Financial Agreement
Financial agreements remain a sensitive topic for many couples.
Whilst entering into a financial agreement is not the most romantic decision a couple will make, legal and financial experts agree that it’s a prudent way of protecting both parties should anything happen to the relationship. In today’s age where one out of every three marriages fail, it’s important for couples to discuss their financial interests and to avoid conflict and uncertainty after the relationship has broken down.
Financial agreements may not be suitable for all couples, however they are particularly important for couples who:
- are entering a second marriage or de-facto relationship;
- own substantial personal properties or financial assets;
- receive a significant inheritance;
- are seeking to preserve assets for the benefit of their children from a previous marriage or relationship; or
- are concerned about the other party’s liabilities or debts.
How Do You Get One
It’s important for couples to approach the subject as early as possible, and at least a few months before any wedding or civil union. The decision should be mutual and once a general agreement has been reached, the following steps should be taken:
- Seek independent or separate legal representation – Couples considering a financial agreement should consult specialist family law solicitors. Each party must engage separate lawyers to avoid any conflicts of interest and ensure each party is being advised about what is best for them individually.
- Both parties must reveal all of their assets, liabilities and income – A couple entering a financial agreement must be transparent and fully disclose all details of their assets, liabilities and income. If full disclosure is not given, the agreement may be set aside by the court.
- Have the contract drafted and signed by a lawyer who specialises in family law – Financial agreements are complex documents that need careful wording to reflect the intended agreement. It is essential that an experienced legal practitioner draft the contract to ensure the agreement achieves the objective of the parties, including protection against future claims. The agreement should be in writing and signed by both parties in the presence of their respective lawyers. The latter must also sign a separate document, certifying that they have provided appropriate legal advice on matters pertaining to the contract.
Initiating discussion about and negotiating the terms of a financial agreement can be challenging. However, the prospect of certainty and security and protection against future claims is a significant benefit to many couples.