Should you get one?
The elephant in the room
So what?
There are sensitivities around prenuptial agreements, also known as prenups. This is especially true for the receiving end of being asked to sign a prenup. Being asked to sign one can make you think that the requester considers the end of your relationship (i.e. marriage or de facto relationship) as inevitable. Whilst prenups are becoming less and less taboo, having a such conversation is to be approached delicately and honestly.
Considering a prenup and having discussions about it with your partner has its benefits:
- Allows you to have honest conversations around your finances, assets and liabilities as you get serious with your relationship;
- Promotes fairness in what you bring into your relationship;
- Determines marital or relational property and ownership;
- Makes divorce or separation less complicated; and
- Provides various protections such as for your kids and previous and future relationships or marriages.
What is it?
According to Wikipedia, prenuptial agreement (also known as antenuptial agreement and premarital agreement) “is a written contract entered into by a couple prior to marriage or a civil union that enables them to select and control many of the legal rights they acquire upon marrying, and what happens when their marriage eventually ends by death or divorce”. This agreement outlines and defines how finances, assets and liabilities are divided between two people if their marriage or relationship ends. Furthermore, a prenup clarifies what is shared and separate – which is especially important if your relationship comes to an end. As a legal document, it is legally enforceable and would be difficult to challenge in the courts.
Is it worth it?
Whether a prenup is worth the time and effort will depend on your wants, needs and circumstances as it can be as simple or complicated as you make it to be. You will need to weigh up your options, circumstances, considerations and, most importantly, what your partner is willing to agree to. A broad inclusion and/or exclusion will not be upheld. Below are things that you will need to consider when preparing one:
- Past: Premarital assets and liabilities that you have prior to entering into your marriage or de facto relationship.
- Present: Your earning capacity now and current financial position of your business as well as clauses around the possibility of updating or replacing conditions of the agreement to reflect your current circumstances.
- Future: Contributions to the household. Inheritances that you will be receiving and any future earnings that eventuate from businesses you built prior to entering into your relationship.
Do you need it?
As with the case above, it will depend on what you want but less so on your needs and circumstances. You don’t necessarily need a prenup if you are willing to split whatever assets and liabilities you have at the time when your relationship ends in a way that the courts see fit. You will absolutely need one if you want to protect your assets. You may also want one if you want to pass on assets to children from previous marriages or relationships, clarify financial rights and responsibilities and/or minimise arguments in case of separation and during subsequent proceedings.
My experience
Having gone through a separation, I can see how a prenup can be useful and a necessity in legal proceedings following a separation. However, for me, I went into this marriage without much and was happy to go into our marriage without a prenup.
What now?
- Are you about to enter into a marriage or a de facto relationship? If so, have you considered getting a prenup? If not, what’s stopping you from considering one?
- Do you have a prenup? What made you get one? In hindsight, was it the right decision to have made?
- Let us know your thoughts!