The Prenup – Would You? Should You?

Your marriage certificate may not be the only thing you decide to sign

When Jake popped the question to Annika after three years together, she didn’t hesitate to say yes. But between the engagement party, visits to reception venues and deciding which of her friends to have as bridesmaids, Annika was quietly wondering what to do about their finances. Or rather, her finances.

“I started working part-time when I was 16, so by the time I was 23, I had enough in the bank for a deposit on an investment property,” explains the 29-year-old marketing manager. “By the time I’d met Jake, I’d managed to pay off quite a bit of the loan. Two years into our relationship, Jake decided to start his own design business. While I supported him 100 per cent, since then all his savings have been channelled into his company, which is still getting off the ground, whereas I’ve been increasing the equity in my apartment, as well as supporting him financially here and there.

“As unromantic as it sounds, I realised that I wanted assets to remain my own – I’ve worked hard to pay off a big chunk of my apartment. I’m already sharing my income with him, while he’s living his dream. I don’t begrudge him this at all, but neither do I see why he should be able to make a raid on my bank account or investment property if the unthinkable ever happened.

“I’m confident we’ll still be together in 40 years’ time, but no-one can predict the future. I want to feel secure that if, God forbid, anything happens down the track, I won’t be left skint and bitter. So I made an appointment with a lawyer, who’s drawing up a pre-up for us. Jake was a bit surprised when I told him, but after I explained my reasons, he was OK. He knows I’m independent and that I’m bringing more financially than he is to the marriage, so he couldn’t really argue.”

photo credit: swanksalot

Why have a prenup?

With all the talk of Hollywood prenups, you’d be forgiven for thinking your bank balance has to rival Paris Hilton’s to qualify for one. But that’s just one of many misconceptions that lawyer Jackie Vincent, from Sydney family law firm Watts McCray, is keen to clear up.

“’Prenup’ is the American word,” she explains. “The Australian term is Binding Financial Agreement (BFA) and they became a legally binding document in 2000. There are no official statistics on how many BFAs exist in Australia, but enquiries about them are definitely increasing.”

“You don’t need to be loaded to have one. Obviously you need to have something to protect, either now or in the future, but you don’t have to be a millionaire. A prenup doesn’t even necessarily have to be signed before the wedding,” Vincent says.

So what about the common view that getting a prenuptial agreement means you don’t have the faith in your marriage lasting? Like drawing up a will and taking out life insurance, Vincent sees a prenup as another financial planning tool. “It gives you certainty for the future,” she explains. “You plan all sorts of things in your life, particularly in relation to money, which prepare you for the unforeseen and somewhat unpalatable future. Some people see a pre-nup as being callous or negative, but it’s a safety net – if something does happen, you’re prepared.”

What do prenups cover?

Your prenuptial agreement can cover pretty much anything you want it to, even a monetary or property windfall that hasn’t happened yet. “If you think you might be in line for an inheritance of some sort but don’t actually have it yet, you can make a provision for the future,” says Vincent. “The prenup can also cover part of your assets, while leaving your options open when it comes to the reminder.” In other words, you can cherry-pick what you’d like it to cover rather than having a blanket agreement that includes everything.

The lead-up to a wedding can be emotional and stressful, which is why Vincent is eager to stress that a prenup doesn’t have to be sorted before the wedding. “I’ve seen couples come in on a Friday with the groom saying, ‘I want this signed before the wedding tomorrow!’ The bride is too busy worrying about the cake and picking up her dress, so she thinks it’s easiest to sign without giving it due consideration. I’ve had to slow people down who haven’t thought it through properly.”

The biggest advantage of having a prenuptial is that it’s tailored especially for you. If you end up in the divorce court, you loose control of how long the process takes, how much it costs and have no say in who ends up with what. “When people manage their own finances they can do what they like, but if it ends up in court, that privilege is taken away,” explains Vincent. “The best thing we can do is make people think about their options. It’s all about taking control of your life.”

How do I tell him I want one?

It’s not the easiest subject to raise, but most of Vincent’s clients agree that broaching the subject wasn’t as awkward as they expected. “When it’s in the context of, ‘We need to do a will, take out life insurance… and I’d like to do this, too’, it’s not as problematic as they’ve feared,” she says.

Context is the key, agrees Anne Hollonds, CEO of Relationships Australia: “While it’s not something to bring up on your first date, it’s good to discuss money at some stage early on. The issue of a prenuptial is best not raised as a surprise topic right before the wedding, but as part of an ongoing discussion of finances and your future plans.”

Remember, his first reaction may not be his final reaction, so if he doesn’t seem enamoured with the idea, leave it with him. If you still can’t come to an agreement, couple counselling may be a good idea. As Vincent notes, “prenups are honest and transparent agreements, so they require couples to be honest and transparent with each other.”

Eeek! He wants me to sign my life away!

It’s all very well when you’re the one calling shots, but what if your fiancé casually drops it into the breakfast conversation? First off, don’t start screaming, “So you don’t see our marriage lasting?!” while aiming your cereal bowl at his heart.

“Prenups are an emotional gender issue,” explains Toby, author and chief psychologist. “From the male side, it seems practical and fair, but from the female side, it may feel scary, insecure, pessimistic and rejecting. Feeling emotional is to be expected, but you should talk about it, so he can explain his reasons for wanting to safeguard his assets.”

When Lisa’s fiancé handed her a stack of papers, she had no idea what they were. “When I realised it was a legal document talking about ‘assets’ and ‘dissolution of marriage’, I was like, ‘Excuse me?’ But then I considered how Ben’s former sister-in-law took his brother to the cleaners when they split up. I didn’t love the idea of a prenup, but I understood where he was coming from, and I realised it was an opportunity to safeguard myself. If he was looking out for number one, so was I!”

You’ll probably need time for everything to sink in, so make it clear you need to think about it, then speak to your own lawyer. If he’s adamant about having a pre nup, it’s your responsibility to make sure you benefit from it as much as possible.

“You should look at things that traditionally affect females more than males, such as the effect of having children on your career,” advises Vincent. “Even short-term, taking time off to have a family can affect not just your finances but also your career progression.

If you’re a working mum, you probably won’t be as flexible with your hours, which may affect your chances of promotion.

“If the court make you the primary carer, it will consider the future effect on your finances and career, but won’t compensate you for the past, so protect yourself in the prenup. If you’re not sure what you’ll want once you have a family, you can also agree that the prenup becomes void if you have kids, or that you’ll modify if to reflect your sacrifices.”

Don’t feel like a ball-buster for standing up for your future finances. “These kinds of clauses are becoming more popular” Vincent notes.

“Women are becoming more career-oriented and want some acknowledgement of the sacrifices they’ve made – and will continue making – if they become single parents.”