How to Decide if You Need a Prenuptial Agreement
21/12/2020
Prenuptial agreements often appear in the media as part of high-profile divorces involving celebrities or wealthy individuals. These stories tend to frame such agreements as tools for protecting fortunes or controlling narratives during public separations. While this may reflect one use case, it creates the impression that prenuptial agreements are reserved for the elite or the ultra-cautious. In reality, many everyday Australians could benefit from understanding how these agreements work.
Misunderstandings around prenuptial agreements are common. Some believe they signal a lack of commitment, while others assume they are only relevant for those with substantial wealth. In truth, these agreements are legal documents that help couples define how assets, liabilities, and superannuation will be handled if the relationship ends. They can serve as valuable planning tools, particularly in relationships where financial circumstances differ or where one or both parties have been through separation before.
Before deciding whether a prenuptial agreement is appropriate, it helps to understand what these agreements involve, how they function under Australian law, and who they may be suited for. A closer look at the structure and requirements of these agreements can provide a clearer sense of their role in modern relationships.
What Is a Prenuptial Agreement and What Does It Cover?
A prenuptial agreement is a legal document that outlines how a couple’s assets, debts, and superannuation will be divided if their relationship ends. In Australia, it is formally recognised as a Binding Financial Agreement (BFA) under the Family Law Act 1975.
To be enforceable, a prenuptial agreement must follow strict legal requirements. Both parties must give full financial disclosure and receive independent legal advice. These steps help ensure the agreement is fair, informed, and legally valid.
The agreement typically covers a range of financial matters. This includes what each person owns, what they owe, and how future entitlements such as superannuation will be handled. Jointly held assets and liabilities are also accounted for.
Below is a summary of what is commonly included:
| Category | Examples |
| Assets | Property, savings, vehicles |
| Liabilities | Loans, credit card debt |
| Superannuation | Existing and future entitlements |
| Joint Holdings | Real estate, joint accounts |
Understanding what a prenuptial agreement includes is only part of the picture. Knowing who should consider one is the next step toward informed planning.
Who Should Consider a Prenuptial Agreement?
A prenuptial agreement can be useful for many couples, not just those with significant wealth. It helps define financial boundaries and reduce future uncertainty, particularly when personal circumstances are more complex.
Couples with unequal assets often benefit from clarifying which property remains separate. This is common when one person owns a business, has savings, or holds valuable assets before entering the relationship.
People with children from a previous marriage may use an agreement to safeguard assets for their family. It can also provide clarity around future inheritance or spousal responsibilities.
De facto couples are not excluded. Those moving in together without marrying can still use these agreements to protect their financial interests.
Common Profiles That Benefit from a Prenup
- Professionals with growing assets or business interests
- Divorced individuals with children or ongoing obligations
- People nearing retirement with superannuation to protect
- Partners bringing property, savings, or debt into the relationship
Once a couple identifies the need for protection, deciding when to formalise the agreement becomes the next consideration. Timing can affect both legal outcomes and how the process is received.
When to Create a Prenuptial Agreement
Prenuptial agreements can be made at various stages, not just before marriage. Choosing the right time depends on the couple’s goals, financial position, and level of commitment.
Some couples choose to prepare an agreement before living together. This is common in de facto relationships, where early planning helps set clear expectations. Under Australian family law, couples who have lived together for at least two years are generally considered to be in a de facto relationship. This means that, if the relationship breaks down, one partner may be entitled to a share of the other’s assets depending on factors such as financial contributions, shared property, and the presence of children. Creating an agreement early can help avoid uncertainty and protect both parties’ interests.
Others prefer to formalise the agreement before marriage, especially when one partner holds more assets. This allows for protection of property brought into the relationship.
Agreements can also be created during the relationship in response to major financial changes, such as business growth or inheritance.
Finally, separating or divorced couples may use a prenuptial agreement to finalise their settlement without going to court.
Timing Options and Benefits for Prenuptial Agreement
| Timing | Common Use Case | Benefits |
| Before living together | De facto couples planning cohabitation | Clear financial expectations early |
| Before marriage | Unequal financial standing | Protects pre-marital property |
| During relationship | Business changes or asset growth | Adapts to evolving circumstances |
Once the timing is settled, the next step is to gather and disclose the right financial information to support a legally sound agreement.
What Needs to Be Disclosed and Agreed Upon
For a prenuptial agreement to be valid, both parties must provide full and honest financial disclosure. This requirement exists to ensure transparency, fairness, and informed decision-making on both sides.
Each person must outline all assets and liabilities, including anything jointly or solely owned. This covers property, debts, superannuation, and any other financial interests. Omitting key information can risk the agreement being set aside later.
Superannuation entitlements must also be disclosed. These future benefits are often substantial and can affect the overall division of assets if the relationship ends.
Being open about financial matters from the start not only strengthens the agreement but also supports trust between partners. The following checklist can help guide the preparation process.
Financial Information to Prepare
- Bank account balances
- Real estate valuations
- Loan or mortgage statements
- Superannuation statements
- Ownership documents for vehicles or businesses
Once all financial details are gathered, the final step involves seeking legal advice to ensure the agreement meets legal standards and protects both parties.
Why Legal Advice Is Mandatory and What to Expect
Independent legal advice is a legal requirement for any prenuptial agreement to be enforceable in Australia. Without it, the agreement may be set aside by a court, even if both parties signed it willingly.
Each party must obtain advice from their own lawyer, separate from the other party. The lawyer must explain the effect of the agreement and the rights that are being waived by signing it. This ensures both individuals fully understand the legal consequences.
Once advice has been given, each lawyer signs a certificate confirming that their client received proper legal guidance. These certificates are then attached to the final agreement. Without them, the document will not be legally recognised.
Choosing a lawyer with experience in family law is essential. A qualified practitioner can help ensure the agreement is fair, tailored to the couple’s needs, and unlikely to face challenges later. With legal advice in place, couples can move forward confidently, knowing their agreement meets all formal requirements.
This final step completes the process, allowing couples to protect their financial futures with clarity and peace of mind. Those who are ready to begin can now seek the right support to prepare or review an agreement.
Contact a Lawyer to Draft a Prenuptial Agreement
A prenuptial agreement is a clear, practical step toward safeguarding your financial future. It gives couples the chance to agree on how assets and responsibilities will be handled, creating a foundation of mutual understanding from the outset.
Successful agreements begin with open communication, complete financial transparency, and the right legal guidance. These elements work together to prevent future disputes and provide clarity during uncertain times.
Independent legal advice is essential. It ensures that both parties fully understand their rights and responsibilities before signing, making the agreement legally sound and less likely to be challenged later.
If you are thinking about a prenuptial agreement or have been asked to consider one, contact our family lawyers in Townsville today. We will help you navigate each step of the process with clarity, care, and confidence.