Author Topic: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?  (Read 1501 times)

Notch

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[AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« on: July 31, 2019, 02:09:17 AM »
Hi guys,

I'm fortunate enough to be getting married to a nice mustachian lady next year - yay!

We both have similar incomes and networths at the moment.  There will probably be kids down the track.

And now for the very unromantic question - is there any point in setting up a Financial Agreement (pre-nup) while we're still amicable, in case things go sour? 

http://www.familycourt.gov.au/wps/wcm/connect/fcoaweb/family-law-matters/property-and-finance/if-you-agree-about-property-and-money/

Does anyone have any experience with them? Pros and cons? Worth it or not? I would love to hear any stories from people who didn't get one and wish they did, or alternatively got one and discovered it was a waste of time.

Thanks!

kei te pai

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #1 on: July 31, 2019, 03:06:11 AM »
What does your lovely lady think?

Little Aussie Battler

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #2 on: July 31, 2019, 05:00:11 AM »
If income/assets are largely equal right now, what’s the point?

What kinds of terms would you want to include?

And, as asked above, what does you partner think of this idea?

Malkynn

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #3 on: July 31, 2019, 05:36:11 AM »
I personally see nothing "unromantic" about marital agreements. The contract you sign when you get married is largely one that sets out a series of financial agreements in the event that you divorce Customizing that contract makes perfect sense if the standard form of that contract doesn't seem fair to either partner.

Our contract protects DH from my massive student debt that k accrued before we got together because I refinanced it as a business debt, which would have made him liable for half.

Prenups only hold up in court if they're fair and reasonable anyway, so it's a good opportunity to have deep and respectful conversations about money.

That said, unless you have a specific and clear reason for a prenup, they pretty quickly become kind of useless as life circumstances change, so unless you plan on updating it regularly, it won't really do much, and will never compensate for not being on the same page financially.

They're also not particularly useful unless you have a major unfair issue from the outset. As circumstances change, an initial prenup can quickly become obsolete and useless.

Notch

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #4 on: August 01, 2019, 01:53:39 AM »
What does your lovely lady think?

She's okay with doing one if it's a sensible course of action.  But we'd both rather not go through the considerable expense (~$2000) if there's little benefit.

If income/assets are largely equal right now, what’s the point?

What kinds of terms would you want to include?

Yeah that's why I'm asking haha.  I work with a surprising number of divorced blokes and hear their tales of woe.  Should that ever happen to us, I'd like to keep the separation of assets as simple, fair and devoid of emotion as possible.

I think I'd want terms terms like "assets brought to and earned during the relationship are retained by the individual" - stuff like that.  As we're both mustachians flirting with the idea of FIRE, there might be the potential for a typical(?) 50:50 division of assets to derail FIRE plans or punish a partner who decided to continue working.

They're also not particularly useful unless you have a major unfair issue from the outset. As circumstances change, an initial prenup can quickly become obsolete and useless.

Thanks for the reply Malkynn! Yeah I agree they don't seem to offer much benefit unless you come to relationship with quite uneven financial circumstances. 

Little Aussie Battler

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #5 on: August 01, 2019, 04:56:57 AM »
How will your agreement deal with kids? Have you agreed that you want kids? Have you agreed which partner (if any) will stay home with them, and for how long?  Does the other partner compensate the non-working spouse? If so, how much?  If one of you gets promoted and needs to work longer hours, does the other spouse take on more unpaid domestic duties?  If so, does that get compensated?

Without all that being agreed, I'm not sure how you could agree to essentially maintain completely separate finances throughout the entire relationship and have that hold up to any kind of post-separation challenge.

Seems like far too much trouble if your financial positions going into the marriage are basically the same, you earn a similar income and you share the same values.

marty998

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #6 on: August 01, 2019, 05:06:16 AM »
I think I'd want terms terms like "assets brought to and earned during the relationship are retained by the individual" - stuff like that.  As we're both mustachians flirting with the idea of FIRE, there might be the potential for a typical(?) 50:50 division of assets to derail FIRE plans or punish a partner who decided to continue working.

Courts will likely overturn this bit when there are kids involved.

You might be able to segregate anything brought into the marriage, but for assets acquired afterwards, especially if your partner is the SAH spouse, it does seem unfair to suggest "what's mine is mine".

Malkynn

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #7 on: August 01, 2019, 07:32:53 AM »
What does your lovely lady think?

She's okay with doing one if it's a sensible course of action.  But we'd both rather not go through the considerable expense (~$2000) if there's little benefit.

If income/assets are largely equal right now, what’s the point?

What kinds of terms would you want to include?

Yeah that's why I'm asking haha.  I work with a surprising number of divorced blokes and hear their tales of woe.  Should that ever happen to us, I'd like to keep the separation of assets as simple, fair and devoid of emotion as possible.

I think I'd want terms terms like "assets brought to and earned during the relationship are retained by the individual" - stuff like that.  As we're both mustachians flirting with the idea of FIRE, there might be the potential for a typical(?) 50:50 division of assets to derail FIRE plans or punish a partner who decided to continue working.

They're also not particularly useful unless you have a major unfair issue from the outset. As circumstances change, an initial prenup can quickly become obsolete and useless.

Thanks for the reply Malkynn! Yeah I agree they don't seem to offer much benefit unless you come to relationship with quite uneven financial circumstances.

I don't know about the laws where you are, but you can't just prenup your way out of being financially equitable in a marriage.

I know of a very agreeable divorce case that was substantially delayed because the husband voluntarily agreed not to take his portion of her pension value. He put it in writing, but the judge insisted on additional documentation proving he was aware of the value he was giving up, which caused a 6 month delay.

I really encourage people not to consider marriage contracts as a means to try and defy what the law intends, but more to address when exceptional cases make the law not as equitable as its intended to be. As in, to put in writing a mutual agreement that any judge would easily regard as fair.

Assets from before a marriage are generally pretty well protected as it is unless you choose to comingle them, so that's not really grounds for a prenup anyway.

I recommend sitting down with your spouse and talking through your financial goals and plans in detail, deciding what you believe is fair, and then sitting down with a family lawyer to see how well the existing law supports your plans.

It doesn't really work if you're going in with the intention of protecting yourself and your future income, that can leave you far more vulnerable to your entire agreement being tossed out. Start from a position of "what's fair to my partner?"

Kayad

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #8 on: August 03, 2019, 06:05:26 PM »
Its still on our to-do list 4 years into marriage. (No reason the marital dissolution agreement has to be executed pre-marriage).  I mainly want to avoid any scenario where divorce leads to forced distribution/division of retirement accounts.  I

Chrissy

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #9 on: August 03, 2019, 09:14:04 PM »
I assume you welcome responses from women, too?  I had one for my first marriage, and it cost $1,500.  MONEY WELL SPENT.

In it, we agreed that we would walk away with what we each brought into the marriage, any inheritances would stay with the person, and we would evenly split what was accumulated during the marriage.  Also, neither party would be entitled to support from the other.  Since he had the history of being a higher earner, I knew agreeing to forego support was probably to my disadvantage, strategically, but reasoned, if the situation was reversed, I wouldn't want to support him either, so it was in keeping with my values.

Within months of the wedding, he was a totally different person with all the signs of an addiction problem, and was removed from his own company by his partners.  His income was $0 during the 17 months we were married.  As I was paying all our bills and giving him an allowance to boot, his addiction consumed ALL of his assets.  Toward the end of our time together, he managed to get into my chequing account, and, over 3 weeks, drained it of the majority of the funds.

Despite this, he would've been entitled to another $6,100 from me in spousal support (total, not monthly, due to the brevity of our marriage).  I'm sure he would've pursued it, but the $1,500 prenup prevented it.

marty998

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #10 on: August 05, 2019, 03:13:56 PM »
I assume you welcome responses from women, too?  I had one for my first marriage, and it cost $1,500.  MONEY WELL SPENT.

In it, we agreed that we would walk away with what we each brought into the marriage, any inheritances would stay with the person, and we would evenly split what was accumulated during the marriage.  Also, neither party would be entitled to support from the other.  Since he had the history of being a higher earner, I knew agreeing to forego support was probably to my disadvantage, strategically, but reasoned, if the situation was reversed, I wouldn't want to support him either, so it was in keeping with my values.

Within months of the wedding, he was a totally different person with all the signs of an addiction problem, and was removed from his own company by his partners.  His income was $0 during the 17 months we were married.  As I was paying all our bills and giving him an allowance to boot, his addiction consumed ALL of his assets.  Toward the end of our time together, he managed to get into my chequing account, and, over 3 weeks, drained it of the majority of the funds.

Despite this, he would've been entitled to another $6,100 from me in spousal support (total, not monthly, due to the brevity of our marriage).  I'm sure he would've pursued it, but the $1,500 prenup prevented it.

Thanks for sharing @Chrissy. If you look back now, were there any signs or red flags of this before you married? Even just little hints of what was to come?

What are the traps beginners need to look out for so to speak. This is something I worry about (and I don't even have a partner yet!)

Chrissy

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Re: [AUS] Are Financial Agreements (Pre-Nups) Worthwhile?
« Reply #11 on: August 05, 2019, 05:48:29 PM »
Thanks for sharing @Chrissy. If you look back now, were there any signs or red flags of this before you married? Even just little hints of what was to come?

What are the traps beginners need to look out for so to speak. This is something I worry about (and I don't even have a partner yet!)

There was nearly nothing.  We dated for 3 years before we married, and the ONLY weird thing that happened was he started sweating profusely at our engagement party (4 months before we married), said he had to get out of there, and disappeared for three hours!  He went golfing with his favorite cousin & cousin's girlfriend.

His addiction was to prescription drugs, and he didn't get those prescriptions until a couple of months after the wedding.
« Last Edit: August 05, 2019, 07:16:01 PM by Chrissy »