When prenups** will fail – part I

A number of previous posts have highlighted court decisions where prenups (or binding financial agreements) have been held to be invalid.

While the range of situations that might lead to this type of arrangement being declared are not enforceable, six of the main examples are set out below (next week’s post will list another seven):

1. The relevant legislative provisions are not followed – the laws in relation to binding financial agreements are very particular. If each aspect is not followed, then there is a real risk that the document will not be binding.
2. Failure to get independent advice – one of the key characteristics of the provisions is that each spouse must obtain independent legal advice. A failure to do so (or failure to receive specialist advice) can mean the agreement will be void.
3. Unconscionable conduct – this normally arises where it can be shown that one spouse has taken advantage of the other, in circumstances where that other spouse was in a weak position.
4. Abandonment or revocation by conduct – over time, the parties may start to consider themselves not to be bound by the arrangement, and even enter into inconsistent arrangements. If this occurs, then the original agreement is likely to be ignored.
5. Undue influence – this can arise in a range of circumstances and does not necessarily require that a spouse be completely overborne.
6. Duress – if one spouse can demonstrate that they effectively felt that they had no alternative but to sign the document, then a case of duress can be substantiated.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Prince song 'Illusion, Coma, Pimp & Circumstance'.

Listen here:

Trust structuring checklist - part II

The post last week mentioned seven key issues that should generally be considered whenever establishing or amending a discretionary trust deed.

Set out below are an additional seven issues that should generally be taken into account:

1. Does the trustee effectively/practically control the trust in an unfettered way?
2. Does the trustee exercise its powers independently or are they controlled or subject to approval by any other person/entity?
3. Is the trustee a beneficiary of the trust?
4. Can a beneficiary or a class of beneficiaries control the actions of the trustee?
5. Can beneficiaries be removed or added, and if so by whom?
6. Is there any risk that the trustee may be seen as simply the ‘alter ego’ of some other person?
7. Does someone (e.g. an appointor, guardian, principal) have the power to unilaterally change the trustee?

** for the trainspotters, a classic song from Prince album ‘Hits (Vol. II)’, namely ‘Raspberry Beret’.