Prenuptial agreements pitfalls and how to avoid them

Prenuptial agreements have become popular over the past decade, but two sessions at the QLS Symposium on 15 and 16 March highlighted traps for the unwary.

Firstly, many binding financial agreements have been set aside because of technical errors. Simple mistakes such as referring the the wrong section of the Family Law Act have deprived parties of the intended benefits of their agreements.

Secondly, in a session that I chaired, we learned from Justice Brereton of the NSW Supreme Court, that it will not matter how well drafted agreements are if there is “undue influence” or “unconscionable conduct”. In relationships such as the relationship between couples who are engaged to be married, the Court may start from a presumption that there will be undue influence.

This is how I minimise these risks:

  • Each agreement must be carefully drafted for the individual circumstances of each couple in compliance with a very technical area of family law. Reliance on “one size fits all” precedents is hazardous.
  • Be conscious of the limits of binding financial agreements. They are good for giving certainty to couples, but that certainty will be lost unless the presumption of undue influence can be disproved. An agreement that is fair to both parties and entered well before the wedding is less likely to be challenged and more likely to survive a challenge.

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