How does a prenuptial agreement affect will disputes?
Published 28 Dec 2017
Author: David Cossalter
Prenuptial agreements enable couples on the verge of marriage to organise how their assets will be divided between them if they later get divorced or one partner dies.
In Australia, prenups are known as Binding Financial Agreements (BFAs) and the Family Law Act (1975) governs how these arrangements are dealt with in court.
A well-written prenup will usually address how a spouse’s assets should be handled in the event of a death. However, BFAs should not be seen as a replacement for a will when estate planning.
Can I pursue a family provision claim?
Former spouses are eligible to make family provision claims under Chapter 3 of the Succession Act 2006.
Nevertheless, couples that have signed prenups are likely to have included a release clause within the agreement that prevents future claims on their respective estates.
Section 95 of the Act sets out the requirements for this release of rights, and the Supreme Court of NSW must provide approval before these intentions become binding.
In some cases, the application for approval only occurs after the death of a spouse. The deceased’s former spouse would therefore be able to make a claim if the Supreme Court turns down the application.
What factors will the courts consider?
A judge will weigh up various factors when deciding on Section 95 releases, including whether:
- The terms are fair;
- The release is prudent;
- The person making the release has sought advice; and
- The release is advantageous to the individual making it.
If approval is given, it is unlikely that a surviving former partner would be able to seek provisions from the deceased’s estate. However, potential claimants should contact an experienced will disputes lawyer to discuss how a BFA could affect a challenge to a will.
High Court puts prenups under the spotlight
A case currently before the High Court of Australia could set a precedent for prenuptial agreements in family law.
The former wife of a deceased property developer – who left behind an estate worth between $18 million and $24 million – is pursuing a larger share of her ex-husband’s assets, despite signing a prenup before marrying him in 2007.
She claimed that she agreed to the arrangement under duress because the deceased had threatened to otherwise cancel the wedding.
The Federal Circuit Court agreed with the woman and made two BFAs she had signed null and void. Unfortunately for her, the decision was later overturned in the appeals court.
The High Court is now expected to provide a final decision on the case soon, which – if the woman succeeds – may give hope to family provision claimants who signed prenups before they married.
Would you like to learn more? Please talk to our dedicated team of expert lawyers at Gerard Malouf & Partners Will Dispute Lawyers.