A Guide to Prenuptial Agreements

A prenuptial agreement determines how a couple will divide property in case of separation or divorce. Read the article below to learn how you can create a prenuptial agreement. 

Disclosures

Both parties should disclose their property, assets and liabilities. These should include joint property, individual property and their inheritance. The contract should clearly define what the couple considers to be marital property. For example, property from a previous marriage may or may not be included as joint property. 

Property Division

The couple will decide how to divide their joint property. Various factors will determine this:

1. Non-financial contributions. For example, if your spouse forfeits working to raise the kids, his or her contributions should be considered.
2. A disabled spouse could be entitled to alimony after separation or divorce.
3. Debts. More often than not, each spouse will have to pay debts incurred before the marriage.
4. Kids from a previous relationship may be included in the prenup if you want them to inherit your property.
5. The contract should define what should happen in case of death. For instance, would you want the property to go to your spouse or kids?

Contingencies

Some couples may want to include lifestyle clauses that penalise a partner for infidelity. The requirement may also address matters to do with the appearance of a spouse, their sex life and weight. These clauses may be legally enforceable in other jurisdictions; however, they do not apply in Australia.

Drafting The Agreement

A skilled family lawyer should draft the contract. He or she will ensure the contract is legally binding. For example, the contract should not contain any contradictions. In Australia, prenuptial agreements could be nullified if one party coerced the other into signing the contract. Parties should have adequate time to read through the contract. Each person should also receive independent legal advice.

Future Follow-Up

The prenup could be adjusted to suit changing conditions. For example, take a situation where one party has a financial windfall, such as winning the lottery. In other cases, the couple may acquire a new family home, or the breadwinner could lose his or her job. Your lawyer should help you adjust the agreement. You may also opt to nullify the contract during divorce or if you decide to create an estate plan.

A prenup can help ease the separation or divorce process. When drafting a prenuptial agreement, couples will need to disclose assets and liabilities, find a suitable method of sharing property, ensure the agreement is legal and adjust the contract to suit changing situations. Talk to a family law solicitor to learn more.