Why Sydney Couples Are Turning to Prenuptial Agreements for Financial Peace of Mind

Forget the headlines. Look past the sensational summaries of relationships that are played out in public. Prenuptial agreements are not just a legal hands-off order from the rich and famous to anyone foolish enough to think marrying them for non-romantic reasons might be beneficial in the long run. Prenups, as they are commonly referred to, are practical arrangements made to avoid misunderstandings and costly, hostile legal proceedings somewhere down the line.

How costly is costly? If you are wealthy, you may be able to afford the huge legal fees that a court battle incurs—but that would be money down the drain, and it doesn’t need to happen.

If you are far from wealthy, that court battle could involve much less in terms of the value of what you’re fighting over, but the legal bills are going to really hurt.

That is why Sydney couples are turning to prenuptial agreements: for financial peace of mind.

What Exactly Is a Prenuptial Agreement?

The word prenup has been coined in recent years because it is short and snappy, and it even sounds quite friendly—which is good, because the concept is nothing to be afraid of. Technically, these are binding financial agreements (BFAs). For once, with technical terms, this one describes precisely what it sets out to: an agreement concerning financial matters (money and property), and it is binding—meaning it exists legally and can’t be disregarded. That’s not to say it can’t be challenged at a later date, but it will take some doing.

The term “binding financial agreement” contains no reference to time, so it is not necessarily prenuptial (which means before marriage). Prenuptial is by far the most common BFA, but it is possible to draft one during a marriage or even after the marriage has run its course, as a way of bringing order where there tends to be chaos.

Are Prenups Only Valid for Traditional Marriages?

The very fact that we can use an adjective like traditional to describe a marriage indicates that there is variety involved these days. Couples who don’t—for whatever reason—want to get married but do operate as a couple, living together and having joint ownerships and responsibilities, are in what is called a de facto relationship (Latin for “in fact”). They are a couple and, in the past, might have been referred to as a common-law husband and wife. As such, they can set up a BFA in exactly the same way as a married couple.

Because this is an increasingly popular way of living, more and more de facto couples are finding that having a BFA (prenup) gives them a sense of security that makes up for the lack of the legally binding aspect of a marriage.

Society is constantly changing, and Australia is a sophisticated country with a multicultural mix that many don’t even notice anymore. It’s what this country is now: a land of opportunity that has welcomed people from all over the world. Same-sex marriages and de facto relationships raise no eyebrows now, and the legal world has had to develop along with society at large. Binding financial agreements are indicative of that development, and nowhere more so than in Sydney.

What Can a Prenup Cover?

Prenups exist to ensure that all relevant parties know what they will have if the marriage or relationship ends. If there are several properties involved, the party drawing up the prenup may choose to retain ownership of them all or to part with one or more.

Pre-existing debts can be an issue when relationships get serious, and one party may want to be protected from any liability. On the other hand, the person with the debt may choose to make sure it remains their responsibility in fairness to their partner.

In cases where children are to be considered, the issue of property ownership takes on a different complexion. If a property has been in the family for many years, for instance, it may well be seen as only fair and logical that it passes to the next generation.

Prenups can be used to safeguard children’s financial future too, and this is the kind of area where discussion and negotiation can play a big part. If you are the one creating the BFA, you may think you have structured it in a thoughtful, considerate way—but your partner may see it differently. If you are that partner, you can make it clear that you are not happy with the draft and request that it be revised.

In some families, cherished pets also need to be factored into the agreement, as they can lead to emotional disputes if nothing is agreed in advance.

Binding financial agreements are different in every case, because people’s lives are different, and what they own and care about are highly individual.

The lawyers on both sides will look after their clients’ interests and point out ways in which the prenup can be amended until full agreement is reached and the definitive document can be signed and brought into effect.

When a Prenup Becomes a Postnup

While the prenuptial agreement takes its name from the point at which it is drafted, something similar can also be created long after the marriage has taken place or the de facto relationship has been up and running for years. This can be done as a result of changing circumstances, for better or worse.

For example, if one party enjoys great financial success through business or another avenue, the joint financial picture can look very different from how it began. Decisions may then need to be made about whether the other party will share in that success.

If a marriage or de facto relationship ends without a BFA—or with an unsuitable one—things can become messy. It is still possible to draft a BFA at that point to avoid going to court and spare both emotional distress and financial strain.

Once Bitten, Twice Shy

If one partner has been married before and experienced either an unfavourable prenup or the absence of one, they may insist on getting it right this time around. Understandably, the other party may feel offended—but as we’ve seen, there is always room for negotiation. Ideally, both parties will come to see it as a practical precaution—much like life insurance. Not something you hope to use, but important to have in place.

The Implications of Not Having a Prenup

Having explored how binding financial agreements can be customised for individual circumstances and how they support the long-term wellbeing of a couple or family, it’s clear that the main reason Sydney couples are embracing them is peace of mind. With a prenup in place, everyone knows where they stand. And if the relationship unfortunately comes to an end, it can help avoid unnecessary heartache and hardship.