22 Jan Are my international pre-nuptials recognised in an Australian divorce?
How overseas assets are treated in Australian family law property settlements
What is a prenup and why would I have one?
A pre-nuptial, pre-marital or Binding Financial Agreement, is a contract usually made to
- protect the pre-existing assets of one or both parties in a marriage, and/or
- protect one or both partners from having to share each other’s debts
Essentially, the prenup is a legally binding document in which a couple stipulate what their rights (and/or responsibilities) are in relation to what they own before a marriage takes place.
Generally speaking, if you have made a prenuptial contract, known in Australia as a Financial Agreement, you have done so because you want your assets to be handled in the way you and your partner have agreed, not necessarily in the way the Family Law Courts might dictate.
Is a prenup valid in another country?
Prenuptial contracts have benefits for all marriages, however, can be especially useful if partners come from different countries, live outside their country of origin, or hold international assets. However, even though prenuptial agreements are recognised in most countries around the world, it doesn’t mean that they will be automatically recognised and applied if you find yourself divorcing in another country. Although these financial agreements became enforceable in Australia in the year 2000 through the Family Law Amendment Act 2000, there are still legal reasons that your prenup might not protect your assets in the way you hoped.
Can a court set aside a financial agreement?
The laws concerning the splitting of assets is quite complex and can be difficult to navigate on your own. There are certain circumstances in which an Australian court might set a pre-existing financial agreement aside. These differ for marriages and de-facto relationships and are worth looking into if you think your settlement might be affected. In general, though, your prenup can be set aside if it can be proven that your agreement
- is not legally binding, it is void, voidable or unenforceable,
- was obtained by fraud or coercion,
- if there have been substantial material changes, or
- circumstances have arisen that make it impracticable for all or part of the agreement to be carried out
Will international assets be considered in a divorce in Australia?
If you are divorcing in Australia, all of your assets, whether held in Australia or overseas, will be included in your asset pool and all assets outside of Australia will be considered as a financial resource. When considering what happens to any international assets you have stipulated in your prenup, the courts will take into account
- when the agreement was made,
- what country the agreement was made in,
- whether circumstances surrounding your assets have changed, and
- whether the value of your overseas estate can be regained through equivalent Australian assets.
If I lodge my case in Australia, will it be settled here?
Just because you apply to have your settlement considered in Australia, the court retains the right to consider whether or not it will exercise its jurisdiction in relation to it. It will firstly conduct the “clearly inappropriate forum test” to determine whether Australian law is the most appropriate to be applied in relation to the assets and the country/countries in which they are held. For an in-depth example of how this test can play out, Stephen Page, Director of Page Provan Family and Fertility Lawyers, walks through some examples in his blog post The Dirty Dozen Approach To International Family Law.
The “Stay test” (Stay and transfer of proceedings) will also be applied before the court decides if it will undertake the settlement, to ensure that there are no pre-existing proceedings in relation to the matter, especially in another country. The timing of when each lodgement was made is an important factor in determining the jurisdiction in which the case will be heard.
If you are considering making a prenuptial agreement because you live overseas or you or your partner are citizens of another country, it is wise to investigate the laws of the respective countries to determine what the potential outcomes might be if you separate. If you already find yourself in such a situation, getting prompt legal advice is crucial.
Especially in complex settlements, such as those involving international agreements and assets, it is important to understand all of your rights and responsibilities. The team at Toomey Family Law has a wealth of experience with complex Family Law matters and will be only too happy to help you understand what the legislation means for your unique case.
Contact us for a free initial consultation to discuss your unique case. We look forward to working with you to build a strong foundation for your future.