If you have signed a prenup and no longer agree to the terms, what can you do?

In brief — Your rights are limited

If you have pre­vi­ous­ly signed a prenup­tial or post­nup­tial agree­ment and no longer agree to its terms, your rights are very limited.

Bind­ing Finan­cial Agreements

Pre or post­nup­tial agree­ments are known as Bind­ing Finan­cial Agree­ments. Bind­ing Finan­cial Agree­ments allow par­ties to con­tract out of the Fam­i­ly Law Act and come to their own agree­ment as to how their prop­er­ty will be divid­ed if the mar­riage breaks down.

Two pos­si­ble cours­es of action

If you are no longer hap­py with the terms of a Bind­ing Finan­cial Agree­ment there are two cours­es of action avail­able to you.

One is to ter­mi­nate the Bind­ing Finan­cial Agree­ment by agree­ment with your spouse. This can either be by enter­ing into a new Bind­ing Finan­cial Agree­ment or by exe­cut­ing a Ter­mi­na­tion Agree­ment together.

The oth­er pos­si­ble course is to apply to the Court to have the Agree­ment set aside.

Set­ting aside a Bind­ing Finan­cial Agreement

The cir­cum­stances where a Court will set aside a Bind­ing Finan­cial Agree­ment are lim­it­ed to the following:

• The Agree­ment was obtained by fraud, for exam­ple, where one of the par­ties to the Agree­ment did not give full dis­clo­sure, or the Agree­ment was entered into to defeat the claims of creditors
• The Agree­ment is void, void­able or unen­force­able. This will require reliance on con­trac­tu­al prin­ci­ples, for exam­ple, whether there was duress when enter­ing into the Agreement
• Cir­cum­stances have arisen that now make it imprac­ti­cal to car­ry out the terms of the Agreement
• Since the Agree­ment was made, there has been a mate­r­i­al change in cir­cum­stances relat­ing to the care, wel­fare and devel­op­ment of a child of the mar­riage and the child and/​or par­ent who will have the care and respon­si­bil­i­ty for the child will suf­fer hard­ship if the Agree­ment is not set aside
• When the Agree­ment was made, a par­ty engaged in con­duct that was unconscionable
• The Agree­ment cov­ers a super­an­nu­a­tion inter­est that is unable to be split and if the Agree­ment cov­ers a pay­ment flag on a super­an­nu­a­tion inter­est and there is no rea­son­able like­li­hood that the flag would be ter­mi­nat­ed by a flag lift­ing agreement

Divi­sion of assets

There are no require­ments for the Bind­ing Finan­cial Agree­ment to pro­vide for a fair divi­sion of the assets on the break­down of the mar­riage, unlike the Fam­i­ly Law Act, which requires the court to con­sid­er whether the pro­posed orders are just and equi­table (rea­son­able) in the cir­cum­stances. In sum­ma­ry, if a per­son has signed a Bind­ing Finan­cial Agree­ment and they no longer agree to the terms, it is impor­tant that they seek legal advice as to whether the Agree­ment itself com­plies with the leg­isla­tive require­ments of a Bind­ing Finan­cial Agree­ment and if not, whether it can be ter­mi­nat­ed or set aside.