Pre-Nups: ‘till divorce us do part?’
Controversy surrounding Binding Financial Agreements – or pre-nups, as they are more commonly known – has again been enlivened by publicity surrounding the recent 'pole dancer case'.
This case, as reported by The Sydney Morning Herald on 24 February 2013, is about a Mr Wallace seeking to set aside a pre-nup between himself and his former wife, whom he met at a pole-dancing club in Sydney. The agreement, signed by the couple prior to their marriage, required amongst other terms that Mr Wallace pay his wife $3,250,000 should their marriage break down within four years. The couple separated two years following their marriage and Mrs Wallace sought to enforce the agreement. However, Mr Wallace claimed it was invalid because he says Mrs Wallace lied when she told him prior to their marriage that she loved him and wanted to spend the rest of her life with him.
Binding Financial Agreements entered into prior to marriage or a de facto relationship inherently carry a stigma; for some spouses it is inconceivable to plan for their divorce. The purpose of the agreement is to detail how the parties’ assets, whether joint or individual assets, should be dealt with following their separation. The agreements are attractive to some couples entering into a relationship, where they wish to protect assets they owned prior to the relationship and would like some certainty as to what will happen if the relationship falls apart. For others, it is simply a matter of prudent estate planning and is no different to preparing a will.
The Family Law Act has strict requirements for Binding Financial Agreements, whether they be prepared prior, during, or after marriage or a de facto relationship. This includes the strict forms of the agreement, that:
- each of the parties receive independent legal advice
- the lawyers sign a certificate about providing such advice
- the parties acknowledge that they each received that advice
- The agreement can be set aside for a host of reasons such as if
- the formal requirements are not met
- there was fraud involved
- at the time of the parties’ separation there had been a material change in circumstances, making it impractical for the agreement to stand
- the effect of the agreement would cause hardship to one of the parties where a child is involved.
Mr Wallace is contesting the validity of the legislation governing Binding Financial Agreements – should his claim be successful, this case could hold serious repercussions in terms of its impact upon “thousands” of other Binding Financial Agreements.
So concerned is the Government with the outcomes of the pole dancer case, that the Attorney General's Department has stepped in and is applying to intervene in the proceedings to confirm the validity of this agreement, and the legislation.
Of course, Mr Wallace is not the first spouse to seek to set aside a pre-nup, with many before him claiming they did not receive adequate legal advice. In some cases, the lawyer giving the advice has even been sued for this reason. A classic example of this is the recent case involving Olympic swimmer, Grant Hackett, who commenced proceedings against his former legal team in Brisbane for not providing him with adequate legal advice prior to signing the agreement. In the wake of circumstances like these, many family lawyers have made the decision not to undertake work associated with preparing, at least, pre-nuptial agreements.
Whatever the outcome of the pole dancer case, greater clarity in this aspect of family law will be welcomed by lawyers nationwide as well as by interested spouses who are asking the question: “Will the pre-nup survive their divorce?”
Should you wish to speak to a family lawyer in relation to a Binding Financial Agreement, or about options available to you, Coleman Greig Lawyers are able to assist you on 02 9635 6422 or email email@example.com