Pre-nuptial Agreements Why Timing is Key

Many of us have at least heard of pre-nuptial agreements, thanks to the headline generating divorces of A-list Hollywood celebrities. However, they’re becoming increasingly common for couples in Australia as well. Widely known as a ‘prenup’, this contract is a financial agreement that contains provisions for division of property and spousal support in the event of a divorce or relationship breakdown. It must be signed by both parties prior to the marriage and may contain other details like the forfeiture of assets on the grounds of adultery as well as further conditions of guardianship in relation to children.

It can be a good idea to have a pre-nuptial agreement, as it provides financial protection for wealthy spouses and can save the headache of a messy divorce. However, extreme care must be taken to ensure that the timing of the agreement signing doesn’t establish a basis for it to be challenged or terminated, in accordance to section 90K of the Family Law Act. This is where the services of lawyer and solicitor Glenn Duker may be of valuable help.

 

In a recent Federal Circuit Court case, Parkes v Parkes [2014], the wife was successful in having the prenuptial agreement set aside, citing that she had been in a position of special disadvantage and was subjected to duress and undue influence.

In this unique circumstance, the husband-to-be produced a completed financial agreement to his fiancée just three days before their wedding. She was told that if she did not sign the agreement before the wedding, he would call it off. This also meant the end of a seven year relationship. Under pressure, she signed.

 

At trial, the Court was required to determine whether the husband’s actions were unconscionable and if his behaviour amounted to duress or undue influence. The wife also needed to establish that she was in a position of ‘special disadvantage’, which was known to the husband, for the agreement to be terminated on these grounds. Eventually, the court ordered in the wife’s favour as she felt she was “given no choice” (the wedding arrangements had been organised and paid for at considerable expense, with $40,000 contributed by her parents) and the agreement was skewed to the advantage of the husband, giving her no rights to any of his property in the future.

 

In these circumstances, the Judge found that the wife’s consent was not independent and voluntary and that she was subject to duress and undue influence. Additionally, the requirements for unconscionable conduct were also satisfied, as it was determined that even if her consent had been legitimate, her circumstances defined her as a person under a special disadvantage.

 

This case teaches that although a financial or prenuptial agreement may be technically binding, the circumstances in which it was entered are extremely significant and can result in a termination of the contract in court.

 

To avoid a situation like this, ensure that you speak to an experienced lawyer in the area of family law at the earliest opportunity. A lawyer can provide expert advice on your legal rights and obligations, and potentially save you a lot of trouble and money. Call lawyer and solicitor Glenn Duker today for professional assistance.

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