Final thought: The rise of the ‘prenup’ in the context of estate litigation

15 August 2022

According to global statistics there has been a spike in binding financial agreements (or prenuptial agreements) in recent years.

When it comes to millennials’ views on relationships, perhaps Kanye West said it best: “we want prenup!”, as this rising trend is mainly driven by a generation that is increasingly interested in investing to grow wealth. At the same time, millennials are marrying later in life with years to build up assets and debt on their own, which perhaps gives them pause to consider asset protection.

So what does that mean for estate litigation in Australia?

Depending on the way that it is constructed, a prenuptial agreement usually addresses how a spouse’s assets should be handled in the event of death, and is a document that a Court may look to in considering and determining the deceased’s testamentary intentions towards their surviving partner, even if they had a valid will.

It is perhaps not surprising that prenuptial agreements can be hotly contested in situations where the surviving spouse wishes to apply to receive provision from their partner’s deceased estate, in circumstances where their prenuptial agreement may have included a release clause to prevent future claims on their respective estates. The Court is then tasked with determining whether the prenuptial agreement precludes the surviving partner from pursuing a claim for something from the deceased estate that they would not otherwise have received under the terms of that agreement. The dispute can also turn on the validity of the prenuptial agreement. It is possible for a Court to rule a prenuptial agreement unenforceable depending on a gamut of factors including its construction (if say, its terms are deemed unfair or its term has expired) and the circumstances of its execution (if say it was executed by a person under duress).

There are a number of factors that a judge will weigh up in determining the validity of a prenuptial agreement which go beyond the scope of this article. At the end of the day, these are important documents which could provide evidence of testamentary intention in contested estates. It is certainly an interesting and evolving area of law on which we will be keeping a keen eye.

This article was written by Simon Crawford, Partner and Angela Liaskos, Senior Associate.

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