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Pre-Nuptial Agreements: What are They and Should You Have One in Place?

What is a Pre-Nuptial Agreement?

A pre-nuptial agreement (or "pre-nup" as it is often called) is a legal agreement made before marriage which can set out how your assets (such as property), liabilities and finances will be managed during the relationship and if your relationship breaks down. 

A pre-nuptial agreement is a type of binding financial agreement (or BFA). Different BFA's can be made depending on the stage of the relationship. A pre-nuptial agreement is often used as a type of safety net when one party entering the relationship has significantly more assets and/or a greater financial position than the other. 

Other BFA's include:

  • Cohabitation agreements (made during marriage)
  • Separation/ Divorce agreements

Lawyers are often dubious when a client comes to them asking to have a pre-nuptial agreement prepared or reviewed. This is because the courts have, in the past, set aside this type of BFA for a number of reasons.

When entering a relationship, protecting your assets and financial future is an important factor to consider. Whilst it may not be anticipated, many relationships come to an end. It is understandable that someone might want to seek protection from this possible future event by entering into a BFA with their partner. It is important to ensure that each party to the agreement receives independent legal advice about the agreement prior to signing. 

In the 2017 decision in the High Court of Australia, Thorne v Kennedy 2017 HCA 49;  the High Court set aside a pre-nuptial agreement which was extremely unfavorable to Ms Thorne. Even though Ms Thorne had obtained legal advice (which opposed her signing the agreement), and she signed the agreement anyway, the High Court set the agreement aside in any event. This was because the High Court found that Ms Thorne had been under duress and undue influence when signing the financial agreement, which was signed 4 days before the marriage to Mr Kennedy.

Some of the circumstances surrounding the agreement included:

  • Mr Kennedy told Ms Thorne that there would be no negotiation concerning the agreement; 
  • Mr Kennedy threatened to end the marriage if the agreement was not signed;
  • The agreement was signed only 4 days before the marriage and there was not enough time for Ms Thorne to consider the agremeent;
  • Ms Thorne was found to be much less powerful (no assets, moving from a foreign country etc) than Mr Kennedy.

The High Court ultimately found that the making of the financial agreement by Mr Kennedy had been one of "unconscionable conduct".



Should you have a pre-nuptial agreement in place?

If you have entered into a relationship and are in a greater financial position or have significantly more assets than your new partner, you may wish to consider the pros and cons of entering into a pre-nuptial agreement.

Similarly, if you have been asked to consider a pre-nuptial agreement by your new partner, you should consult an independent lawyer to discuss whether the pre-nuptial agreement is fair and equitable to your specific circumstances, or whether the agreement needs to be altered or declined.

Each relationship and agreement will be different and it is important that they are assessed on a case by case basis. The law surrounding pre-nuptial agreements is complex. Ardent Lawyers will meet with you to take your instructions on your specific circumstances and apply the relevant law to your circumstances to provide you with relevant advice and recommendations tailored to you.

If you are considering a pre-nuptial agreement, and would like some advice as to whether the agreement is right for you, contact our law firm on (02) 4444 6808 or to make an appointment to discuss your circumstances in complete confidence. We are happy to meet with you at your home or office, or alternatively at our office by appointment.