How far ahead of a wedding should couples enter into a Financial Agreement in order for it to be binding? The recent Federal Circuit Court of Australia case of Parkes & Parkes  FCCA 102 is right on point to answer this question.
In Parkes, the wife argued that the Financial Agreement she signed three days before her wedding day should be set aside by the Court because of duress, undue influence and unconscionable conduct by her husband. The Agreement stated that if the couple separated, she was not entitled to any assets owned by the husband.
At the time the couple signed the Financial Agreement, they had been dating for six years and engaged for 11 months. They had already made arrangements for the wedding venue and invited their guests. The wife’s parents had also contributed close to $40,000 for the reception. The Husband’s evidence was that there was one last thing on his “what to do list” prior to the wedding – arrange for him and his fiancé to sign a prenuptial agreement.
The wife’s evidence, which Judge Phipps accepted, was that only three days before the wedding, the husband presented her with a Financial Agreement. The husband’s ultimatum was clear – sign the agreement or the wedding’s off.
For a Financial Agreement to be binding, both parties must obtain independent legal advice from a lawyer. The wife’s evidence was that the husband chose a lawyer for her, drove her to her appointment and waited out the front in the car, until she emerged 15 or 20 minutes later, signed Financial Agreement in hand.
Judge Phipps found that the wife was, “in a position of ‘special disadvantage’. If she did not sign the prenuptial agreement, not only was the wedding cancelled but the likely result of such a traumatic event would be that the Wife’s relationship with the Husband would be over.”
“The prenuptial agreement was not to the Wife’s advantage. It gave her no rights at all in the future to any of the Husband’s property. She knew that it was to her disadvantage because [her lawyer] told her so. Nevertheless, she signed it because she considered she had no choice.”
After signing the Financial Agreement, the parties had two children together and the wife had given up her job to look after them full-time. She did not have any property to her name and was reliant on Centrelink to support herself. Judge Phipps found that the wife would “suffer hardship” as a result of these changes to her circumstances and concluded that the Financial Agreement should also be set aside on this basis.
Parkes is a useful read as to some of the risks associated with entering into a Financial Agreement prior to marriage. It is, however, important to remember that every case will be decided on its own unique facts.
We regularly receive enquiries from a bride or groom to be, who are seeking advice about entering into a Financial Agreement with their fiancé prior to marriage. Often, they may be getting a nudge from their parents, who are keen to ensure that any financial gifts or contributions they have made stay in the family.
If you are currently in a relationship (including de facto relationship) and are considering entering into a Financial Agreement, one of our experienced team will be happy to discuss your options. In the event you have previously entered into a Financial Agreement that you now believe should be set aside, we can also provide you with appropriate advice. We look forward to hearing from you.