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John Melis, Expert
Hi, I’m John, solicitor, and reviewing your post, and may need to ask a few questions a long the way to assist you.
Concerning your important matter the best way for your son to protect his assets is to enter into a financial agreement with his partner so that in the event of a relationship breakdown he will retain all his assets that he owns.
This financial agreement is also known as a prenuptial.
One of the best protections between a couple in the event of a relationship breakdown is a financial agreement. However, ending a relationship financial agreement that has been validly created can be problematic for the party that wants the agreement ended. The Family Law Act 1975 (Cth) provides three circumstances upon which the agreement may be ended: it may be terminated under sections 90J or 90UL; or set aside under sections 90K or 90UM; or found not binding under sections 90G(1) or 90UJ(1). Where an agreement is determined by the court that it us void, voidable or unenforceable the court may set the agreement aside under sections 90K(1)(b) or 90UM(1)(e). Relationship disputes are complex, especially where there is a financial agreement in place. So before signing that financial agreement, get that legal advice to protect your legal rights and interests.
Where you would like a pre-nup it will be necessary to engage a lawyer to draft this document and have it witnessed on the same.
The pre-nup document is very good to have anda modern approach to relationships.
Two people who are contemplating marriage and wish for an agreement setting out how their property and financial resources will be divided in the event of a breakdown of that marriage can enter into an agreement under s 90B of the Family Law Act 1975.
If parties contemplate a lengthy engagement or want to ensure that their legal position prior to the marriage is secure, it is advisable that the parties enter into both a s 90B agreement, which will set out what will happen after the marriage takes place, as well as a financial agreement during a de facto relationship in relation to their legal position prior to the marriage taking place.
A pre-nuptial or pre-cohabitation agreement is also called a financial agreement. These agreements are made for parties that are contemplating marriage or cohabitation together and are entered into before that event takes place. Financial agreements before marriage or cohabitation as a de facto couple are legislated under the Family Law Act 1975 (Cth) sections 90B and 90UB of the Act.
Deciding whether to enter into a pre-nuptial or pre-cohabitation agreement requires careful consideration. Pre-nuptial or pre-cohabitation agreements are complex documents to prepare as they need to provide for future events such as birth of children, loss of employment, health issues, inheritance, superannuation, division of property, which this list is extensive as to matters that need to be included in the agreement, with the consideration that life events change an individual, and this human factor needs to be taken into account. The drafting of a pre-nuptial contains serious risk if not accurately prepared for the party relying on the agreement in a dispute.
In relation to superannuation it does not need to be included in the pre-nuptial agreement, as it can be accounted for by using a separate superannuation agreement. If a superannuation split is included in the pre-nuptial or pre-cohabitation agreement, it will be necessary to obtain a court order pursuant to section 90MT of the Act to allow the split. On this basis it is more appropriate to refrain from detailing superannuation in the pre-nuptial or pre-cohabitation agreement, and have the separation of the superannuation implemented into a superannuation agreement.
One of the main risks of a pre-nuptial or pre-cohabitation agreement is that if they have not been drafted correctly or signed properly the court may set the agreement aside. The pre-nuptial or pre-cohabitation agreement requires independent legal advice certification under section 90G(1) and 90UJ(1) before the agreement is entered into, and if the certification is not done accurately and a dispute arises the agreement may be void.
In Parker v Parker (2012) the court looked behind the independent legal advice provided and found that requisite advice was not provided, and the pre-nuptial agreement was set aside.
In Kostress v Kostress (2008) the pre-nuptial agreement was entered into just before the marriage and was found void for uncertainty of provisions.
In Black v Black (2008) the trial judged refused to set aside the financial agreement, and on appeal, the agreement was set aside as it did not comply with section 90G of the Act.
Pre-nuptial or pre-cohabitation agreements are not always appropriate for couples who intend to have children, as there are a large number of variables that may occur, which in total would be difficult to account for in the agreement accurately. Where children are taken into account for the agreement, the clauses will be numerous in number and require serious input from both parties in relation to the potential future events that may occur. Preparing for a future event is not just about leaving it to the lawyer to draft, it involves extensive discussion with the couple as to the potential events and expectations each party will have under the specific event that will occur. If the considerations for future children are not taken into account precisely, the agreement may be set aside by the court under sections 90K(1)(d) or 90UM(1)(g) of the Act.
Attempting to quarantine initial contributions brought by the parties to the relationship has to be carefully detailed in the agreement with the consideration that the items brought into the relationship may lose their form; such as one party selling their property and the sale proceeds being reinvested jointly with their partner into another investment. In this circumstance the agreement needs to detail the value of the property at the date of signing that agreement, and that value should be supported by a certified valuation to avoid later disputes. There are numerous complex issues with the divesting of assets that are brought into the relationship by each party and this issue alone can increase the risks of the agreement being void for uncertainty.
The agreement that is prepared must be fair on the circumstance in the event of separation. The agreement must take into consideration all future events, which some of these points include the initial contributions that are divested into the relationship, future children, length of relationship, earning capacity, income, inheritance, property and health.
If a pre-nuptial or pre-cohabitation agreement is entered into, and the initial contributions are isolated, and the couple separate, and the asset pool is only made up of the initial contributions, and there are children of the relationship that are not properly accounted for in the agreement, the court can set aside the agreement on the basis of sections 90K(1)(d) and 90UM(1)(g) of the Act.
The pre-nuptial or pre-cohabitation agreement can be drafted to oust spousal maintenance. However, if at the time of separation there are children and the carer of the child has financial hardship, the court may set aside the agreement.
Pre-nuptial or pre-cohabitation agreements are appropriate in numerous cases and as example of a couple of these situations is first time or second marriages with accumulated assets that need protection; to protect potential inheritances; to protect businesses that are brought into the relationship; to provide a detail record of support for one party such as education; to take into account religious beliefs that will affect separation, to take into account a partners debts that were not accumulated by the couple.
The challenge for each party that is considering a pre-nuptial or pre-cohabitation agreement is to have the agreement carefully and accurately prepared to avoid the agreement resulting in a dispute at a future date, and then having the agreement set aside by the court. The adage that good legal drafting takes time is true, and when pre-nuptial or pre-cohabitation agreements are prepared, precision in relation to the present and future facts, as well as the human factor in conjunction with the legislation is important.
You only need one lawyer at the start to draft the agreement. Then when the agreement is finalised, then the other party to the agreement will need to obtain their own lawyer to review the agreement and provide legal advice on that document, and then the lawyer will witnesses that person signature on that document if they are still in agreement following the legal advice being received.
The pre-nup will protect your requirements as needed, as long as it has been drafted correctly taking into account all the aspects of the law.
You do not need to provide a lot of documents, general details will be sufficient for the drafting of the agreement.
The general turn around time for a pre-up to prepare takes around 14 to 20 days.
Would you like to consider this option.
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John Melis, Expert
I kindly request that you please scroll up. I have posted a reply for you that explains your options, if you cannot see the response, I request that you refresh your screen, and where it does not show please let me know and I will repost it for you. I am here to assist you when you need.
John Melis, Expert
The best way to secure his financial assets is through a binding financial agreement. Unfortunately the Australian law has no other option but that particular aspect.
However if your son is willing to transfer all his assets into a discretionary trust where there are two beneficiaries on the basis of that trust this would be another option but it is a costly exercise as additional stamp duties need to be paid.
Under the circumstance you have provided financial agreement is the best way moving forward
John Melis, Expert
You are welcome, and thank you for supporting the community.