Understanding Prenuptial Agreements – Who and Why You Should Get a Prenup
Financial Agreements before marriage have been growing in popularity since the 2000s and family lawyers around the world have witnessed significant growth in the number of couples wanting to setup prenuptial agreements to safeguard their individual finances accrued before entering a relationship or marriage.
Who Are Prenuptial Agreements For?
To dispel a common myth – prenuptial agreements are no longer the sole domain of rich celebrities or those with significant financial means but are becoming increasingly common – albeit quietly – among all generations and income levels.
Financial Agreements before marriage, also known as pre-nuptial agreement/ or “prenups”are available for couples wanting to protect their own assets and/or determine the division of assets should the relationship end.
But why does it seem that prenuptial agreements are growing quietly? Simply put, there is still a perception of stigma attached to prenups as they can be seen to be quite clinical in nature, lacking in romance and potentially viewed as a cynical safeguard.
But why does or should this stigma occur around pre-nups only? After all, most people take the financial precaution to consider what will happen to their financial assets should they die or become permanently injured, by obtaining life insurance,mortgage protection, wills, making funeral arrangements and other less than palatable measures, yet the discussion around what will happen to their assets should their relationship end can sometimes still have negative connotations?
With time it is expected that this will dissipate and the changing nature of people entering a long-term relationship or marriage will continue to help.
Why Are Financial Agreements or Prenups Growing in Popularity?
Prenups are becoming more popular for a quite a simple reason – changing society and attitudes.
Society has changed significantly in the last few decades across many areas including: –
• The number of women working has grown exponentially. Women are no longer entering a relationship without their own finances or assets to consider for protection.
• Marriages or relationships are happening later – again both parties will bring their own financial resources to the table.
• Millennials are less inhibited to consider the options ahead of marriage.
• While marriages are declining, a growing number of couples consider alternatives such as cohabitation, same-sex marriages or civil partnerships.With these alternatives to traditional marriages, comes a growing openness to look at other options.
• Prospective in laws want in – with societal issues such as high housing prices, parents are increasingly looking to help kickstart a relationship or marriage by helping financially towards savings for mortgages and the like.With growth in this area, all parties want to safeguard their finances should the marriage or relationship break down.
• Second marriages are increasing in popularity with more and more “blended”families and couples that marry with children from their former marriages. Once bitten, twice shy – second time round people are more precautious. A prenuptial agreement in this scenario is very much family centric to guarantee that the children will be financially protected.
• We are more realistic in our expectations – as individuals we are all much more aware of the potential of a relationship breaking down. Growing acceptance of pre-nuptial agreements is borne out of our understanding and reality that unfortunately many relationships break down.
I’m Not Married – Can I Get a Prenup (or Financial Agreement)?
While not referred to as a “pre-nup” Cohabitation Agreements are available for those in or considering entering into a de facto relationship and afford the same protections available to those entering into a marriage. There are plenty of resources online allowing couples to draft their own cohabitation agreement,but buyer beware.
What Should I Include or Consider in my Prenuptial Agreement?
Naturally,each individual circumstance comes with its own unique considerations but some key areas to consider: –
• Savings/Cash and how much you each individually brought into the pot and how this will be divided upon separation;
• If buying a house together, who contributed what percentage to the deposit and how this will be taken into account down the track;
• Stocks, shares, and financial investments – and again, how much you each individually brought into the pot and how this will be divided upon separation);
• Inheritances – potentially quarantining any future inheritances as part of the agreement;
• Superannuation – and again, how much you each individually brought into the pot and how this will be divided upon separation;
• How you want separate and marital property to be divided upon separation;
• What measures need to be put into place to protect your business;
• What personal items you brought with you such as heirlooms and antiques that you wish to protect;
• What liabilities should be the responsibility of each party.
While family lawyers draft and give advice on prenuptial agreements as part of their everyday practice, there is a key element that needs airing – that is, as the name suggests, it is an agreement that both parties must be fully aware of, discuss, obtain independent legal advice on and sign off together with their respective lawyers.
To read more about prenuptial Agreements head over to our dedicated page on prenuptial agreements.