What happens when prenuptial agreements are signed under duress? Will they be upheld by the court? And how does the court determine what constitutes duress?
A Prenuptial Agreement (also known as a Binding Financial Agreement) can be made before marriage to discuss the split of your assets if you and your partner were to ever divorce. If the agreement is made properly and signed by both parties, once you split, your prenuptial agreement is legally enforceable. It’s common to think that only wealthy couples with a lot at stake sign prenuptial agreements, but the truth is that they may be beneficial for all kinds of people.
When Are Prenuptial Agreements Signed?
In most circumstances, agreements are made when one partner has more assets than the other and wishes to keep a certain percentage or specific assets when the relationship ceases. Prenuptial agreements are not compulsory and in most cases, are signed as a precaution. They do however make the divorce less complicated as you have already decided how you wish for some assets to be split, and reduces the likelhood of a nasty, protracted court battle.
If you wish to sign a Prenuptial Agreement, the legal requirements are quite strict in order to ensure they are valid and that both parties are protected.
- Each party must receive independent legal advice;
- The legal advice must be from a lawyer in the Australian jurisdiction (this may be obvious but there have been some cases where agreements have been set aside because legal advice was received from a lawyer practicing in another country);
- The agreement must be in writing;
- It should be drafted and signed in the presence of a lawyer and
- It must contain a complete disclosure of assets, liabilities, expenditure and income.
You can not enter into this type of Agreement without the help of a solicitor.
Problems With Prenuptial Agreements
It’s important to know that prenuptial agreements are not bullet proof. Even when you follow the steps correctly, problems can arise. The most common mistake is when an agreement is signed under duress. Recently, a situation regarding a woman who moved to Australia to marry her multimillionaire fiancé ended up in court. Before the marriage, she was forced to sign the prenuptial agreement or the wedding would be called off.
The bride wanted a wedding and to have a child with him, but if there was no marriage she would have “no job, no visa, no home, no community’’, the judge said.
Before signing the prenup, the woman’s lawyer told her: “It is the worst contract I have ever seen. Don’t sign’’, the Federal Circuit Court heard. The husband had assets worth between $18 million and $24 million. In September 2007, just days before the wedding, Ms Thorne’s solicitor pointed out how the prenup would disadvantage her if the couple separated.
The woman’s lack of financial equality and permanent status in Australia meant that she relied on her husband for everything and her desire for marriage and motherhood made her powerless, the judge said.
On March 4 Judge Demack found both agreements were signed under duress, were non-binding and she set them aside.
Another similar problem also occurred in Australia. The wife was studying in Australia on a student visa from Thailand and met a man who was a permanent resident in Australia. She returned to Thailand when her visa expired yet returned on a fiancé visa and during this visit, she fell pregnant. A few days before the wedding, the fiancé decided to draw up a prenuptial agreement. She stated she did not believe it was necessary as she was not interested in claiming his property. Yet he threatened that he would not sponsor her visa if she did not, so despite feeling under duress, she signed. At first she did not sign using her correct signature and he made her resign it. She felt pressured into signing the agreement as she was pregnant and required his sponsorship to support her visa.
Therefore, the courts found that the contract was entered into under duress and if it had not been signed, her circumstances would have included returning home to her family unmarried and with a child.
Therefore, prenuptial agreements should be entered into very carefully. It should be ensured that you are signing an agreement that both you and your partner agree on, not just something that is supported by one party. Also, ensure you have left enough time to prepare your agreement. You don’t want to be rushing into something a few days before you tie the knot. Instead, plan it out, discuss things with both your partner and your lawyer to ensure that you are creating an agreement you are both happy with.