For families who have built significant wealth, a child’s marriage raises a practical question: how will family assets be treated if the marriage ends? In Australia the main tool is a binding financial agreement, commonly called a prenuptial agreement when made before marriage. Approached with care, it is a planning document that protects both spouses by setting expectations clearly, rather than a sign of distrust.
How binding financial agreements work
Under the Family Law Act 1975 (Cth), couples can make a binding financial agreement before marriage, during marriage or after separation, and de facto couples can make equivalent agreements. An agreement can set out how property, financial resources and superannuation will be dealt with if the relationship ends.
To be binding, strict requirements must be met. Each party must receive independent legal advice before signing, and the lawyer must provide a signed statement that the advice was given. The agreement must be in writing and signed by both parties.
Why agreements are challenged
Courts can set an agreement aside, for example for fraud, including non-disclosure of significant assets, or where it was made in circumstances of unconscionable conduct or undue pressure. The High Court’s decision in Thorne v Kennedy (2017) set aside agreements signed shortly before a wedding by a party with little bargaining power. The practical lessons are clear:
- start early, well before the wedding date;
- make full and honest disclosure of assets, including interests in trusts and companies;
- ensure each party has genuinely independent advice and time to consider it;
- avoid terms that are so one-sided they invite a challenge;
- review the agreement after major life events, such as the birth of children.
Family trusts and businesses
Many wealthy families hold assets in discretionary trusts and family companies rather than personally. These are not automatically protected. In Kennon v Spry (2008) the High Court treated assets of a discretionary trust as property available for division where one spouse effectively controlled it. Protection therefore depends on how the trust is controlled, who the appointor is, how distributions have been made, and how the agreement describes the family’s interests. A prenuptial agreement works best alongside a well-drafted trust deed and family governance documents. See protecting an inheritance from divorce and creditors.
Cross-border marriages
Where a couple has connections with Singapore, Hong Kong, Mainland China or elsewhere, the agreement may need to be considered in more than one legal system. Courts in Singapore and Hong Kong may give significant weight to a prenuptial agreement but do not treat it as automatically binding. An Australian agreement that does not meet Australian requirements may carry little weight here. Where the couple may live in more than one country, advice in each jurisdiction should be coordinated.
Marriage and wills
In Victoria, marriage generally revokes an existing will unless the will was made in contemplation of that marriage. Divorce generally revokes gifts to the former spouse. A prenuptial agreement should be reviewed together with updated wills and powers of attorney. See estate planning for blended families.
How we assist
We prepare and review binding financial agreements, advise the other party where independent advice is required, and coordinate with family trust, company and estate planning so that the documents work together. We act in English, Mandarin and Cantonese. Justin Chua is a Nationally Accredited Mediator and an Affiliate member of STEP, the worldwide professional body for trust and estate practitioners.
Frequently asked questions
Are prenuptial agreements binding in Australia?
Yes, if they meet the requirements of the Family Law Act 1975, including that each party receives independent legal advice before signing. A court can still set an agreement aside in certain circumstances, such as fraud, non-disclosure or unconscionable conduct.
How early should a prenuptial agreement be signed?
As early as possible, and well before the wedding. Agreements signed under time pressure shortly before a wedding are more vulnerable to challenge.
Does a family trust protect assets from a divorce?
Not automatically. If one spouse effectively controls a discretionary trust, the court may treat its assets as available for division. Protection depends on the trust deed, who controls the trust and how it has operated.
Will an Australian prenuptial agreement be recognised in Singapore or Hong Kong?
Courts there may give a prenuptial agreement significant weight but do not treat it as automatically binding. Couples with connections to more than one country should obtain coordinated advice.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice. Victorian law unless stated otherwise.
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