I have entered into a "prenup" agreement overseas. Will it be binding in Australia?

What is a financial agreement?

A "prenup", or a financial agreement as they are known in Australia, is a legally binding contract that sets out how your assets will be divided without the court's intervention if your relationship breaks down in the future. A financial agreement can be entered into at any stage of a de facto relationship or marriage, including before, during and after.

What can be included in a financial agreement?

A financial agreement can record the intentions of you and your partner as to how all, or some, of your property will be dealt with in the event of a separation. It can also cover other matters, such as obligations of one of you to pay spousal maintenance to the other if your relationship ends.

You can tailor your financial agreement to suit your own financial position, priorities and circumstances. For example, you may wish to ensure that assets you brought into the relationship such as a house, business or an inheritance are retained solely by you and excluded from any property division. You may also wish to protect future inheritances or money gifted or loaned to you by your parents.

Financial agreements are becoming increasingly used as an asset protection tool, by ensuring that intergenerational family wealth is protected and preserved for future generations, and is not susceptible to a claim from a spouse in the event of a relationship breakdown.

Are overseas financial agreements binding in Australia?

If you have entered into a financial agreement in another country, you may presume that it will automatically apply in Australia. However, this is not the case, even if the agreement you signed states otherwise. Australian law does not recognise financial agreements made in overseas jurisdictions as binding, unless they meet the strict requirements of the Family Law Act 1975 (Cth) (the Act).

If you and your partner are not living in Australia on a permanent basis at the time the agreement is entered into, it may be possible for one of you to make a property settlement or spousal maintenance claim in Australia in the future. For example, you may reside in Australia as a couple during the relationship, or one of you may move to Australia if your relationship breaks down.

Therefore, to ensure that your partner cannot make a claim in Australia for property settlement or spousal maintenance, it is prudent to enter into a separate financial agreement that has been prepared pursuant to the Australian legislation.

What are the requirements for a financial agreement to be binding in Australia?

To be binding in Australia, a financial agreement must meet the strict technical requirements under the Act, including the following:

• The agreement must be in writing and signed by both you and your partner.
• The agreement must specify which section of the Act it is made under, depending on whether you are married or in a de facto relationship, and whether you are making the agreement before, during, or after the marriage or relationship.
• Prior to entering into the agreement, each of you and your partner must receive independent legal advice from a qualified Australian lawyer as to the effect of the agreement on your rights, and the advantages and disadvantages of signing the agreement.
• Each party's lawyer must sign a statement of independent legal advice, stating that the requisite advice was provided, and a copy of that statement must be given to each of you.
• If the agreement deals with spousal maintenance obligations or purports to finalise all future spousal maintenance claims, it must specify the amount you will receive or pay. This can be a lump sum or a periodic payment.

How we can help you

Financial agreements are highly technical and detailed documents, and there are very strict legal requirements that must be met before they are binding. When entering into a financial agreement overseas, careful consideration and specialised legal advice should be sought by a specialist family lawyer in Australia. If it is intended that the terms of the agreement will operate as a bar to future family law proceedings in Australia, it is likely that a separate financial agreement under Australian law will be necessary.

Lander & Rogers has the largest family law group in Australia, with over 75 lawyers practising domestically and overseas. We have several decades of experience drafting financial agreements and advising clients on their suitability. Please get in touch to discuss your particular circumstances.