Prenuptial agreements

By

20/12/2010


Question: I’m 28 years old with a property portfolio worth just over $4m. My question relates to raising the issue of a prenuptial agreement with an existing partner. I’ve heard of relationship break-ups where either party, out of anger or revenge, has fought the other party for as much of the assets as possible. I can only imagine the pain and suffering these people have gone through. Although I’m currently not in a relationship, I am quite mindful about protecting what I have worked very hard for.

In my last relationship, my then-girlfriend and I were talking about moving in together. However, when I cautiously brought up the issue around my assets, the conversation turned sour. When I tried to convince her to see my family solicitor so that a prenuptial could be drawn up, she flatly refused. Needless to say from that moment on I knew that I couldn’t commit to this girl, and the relationship soon ended.

When I mentioned my experience to a few close friends, they all expressed concerns as they, too, have assets that they would like to protect. It seems that raising the topic without undue stress is somewhat of a tricky matter.

Personally, I feel that raising these issues should be part of any serious relationship; however, I can also understand how sometimes the other party may not think the same way. So then, what is the best way to get an agreement from a partner so that it is not damaging to the relationship?

Answer: Thanks to recent amendments to the Family Law Act, de facto couples can now enter into a binding financial agreement (a de facto ‘pre-nup’) prior to moving in together. These agreements function in much the same way as a pre-nuptial agreement for a couple who are planning to marry, and stipulate precisely who gets to keep which assets in the event that the relationship breaks up.

An agreement such as this would be ideal in your circumstances (and that of your friends’) to protect your investments and ensure that all your hard work in building your portfolio is protected.

The issue of discussing a pre-nup or equivalent financial agreement with your partner is one which comes up time and time again, and sadly there is no easy or correct way of doing it. It is difficult for a lawyer to answer these questions because the problem is a personal one rather than a legal one, and the person most likely to know the correct answer is you.

You will know your partner and your relationship better than any lawyer, and therefore you will know the best way to raise the topic of a financial agreement.

If you’re worried that your partner will react negatively and be offended at the mere suggestion of a financial agreement, you’re not alone. Many people take the somewhat pessimistic view that a financial agreement will somehow curse their relationship and is a sign that you don’t think it will last forever.

The best advice I can give is to approach the financial agreement in a positive way, and stress its advantages at every opportunity. Point out that having a financial agreement in place could help make the relationship stronger, as you will both need to make the relationship work because there is no ‘easy way out’ for either of you if it comes to an end.

In that sense, the agreement can act as an incentive to stay together. It can also help to ensure that if the relationship does end, it ends for the right reasons, rather than the possibility of a significant financial benefit being bestowed upon the less financially secure person.

It would also be prudent to point out that the financial agreement will only ever come into effect in the event that you actually break up, so an unwillingness to enter into one could be considered an indication that your partner does not think the relationship will last forever.

Of course, how to discuss these matters with your partner specifically is not possible for me to answer. As stated above, it is you who knows your partner best, and therefore you are most likely to know the best way of bringing it up.

If you are successful in settling a financial agreement with your partner, keep in mind that an agreement relating to a de facto relationship will immediately cease to have effect if you marry your partner. This means that if things work out well and you eventually decide to marry, you will need to get a new agreement drawn up. This agreement may be on the same terms as your original de facto agreement; however, you may wish to vary the terms when given the opportunity.

- Fran Fox

Fran Fox is principal and accredited family law specialist at Macpherson+Kelley Lawyers. Fran has over 20 years’ experience in family law and related areas, including de facto relationships. Her principal areas of practice include financial settlements including super, pre marriage, after marriage and co habitation agreements as well as divorce and de facto relationships. Fran can be contacted on (03) 9794 2661 or e-mail fran.fox@mk.com.au

Disclaimer: No magazine article can consider your individual circumstances or personal needs in relation to your sale or purchase transaction. You should seek advice for your particular circumstances before entering into any transaction.

 

 

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