In 2019, some researchers found out that one out of three marriages ends with a divorce in Australia. And that’s the reason the topic of prenup agreement started making noise all over the country.
Many couples consider “love” as the big prenup deal, but that’s not true. So, what is a prenuptial agreement? It’s a deal between the partners who are about to get married or already in a relationship, covering financial matters and spouse maintenance.
Canstar research reveals that currently, only 6% of married couples in Australia have a prenup agreement. The other 91% do not want to get into this agreement while the rest 3% are hesitant about this deal. Hence, 97% of couples consider that this agreement won’t produce a better result than a divorce settlement.
So, to lay your doubts to rest, we’ve jotted down the pros and cons of the prenup agreement.
Pros of Prenup Deal:
Greater control over the result
In prenup agreement, assets and finances will be divided based on what the couple has agreed to, not according to the family court. Therefore, there will be greater control over the outcome.
Many lawyers also denote it as a positive result because, in some situations, court settlements can result in unjust outcomes. It often happens when there’s a difference in the income of both parties.
If you’ve already separated the assets and debts, then during bankruptcy or fraud, only the said party will be responsible. On the other hand, if there’s no prenup, then all your property and assets will go into liquidation.
Saves you money and stress in the long run
A prenup deal, also known as a binding financial agreement (BFA), may look like a costly and complicated document to create. But it’s not that complex as compared to the emotional and financial costs that you’ll feel afterward while settling the dispute. Also, there’s no guarantee that the family court will get you a desirable outcome.
Furthermore, the litigation cost is significantly higher than BFA, and also you won’t get a solution in a day. You have to wait for as long as two years to get the date in the court, whereas you get the BFA in one or two weeks.
Prevail the tax benefits
You will receive the same benefits in pursuit of the BFA as you’ll in court orders. To put it differently, both the parties will get substantial savings on capital gains tax and state transfer duty in relevant cases.
Peace of mind in terms of the future
As you’ve made future settlements well in advance through prenup agreement, there will be a peace of mind for both the parties. You’ll have clarity concerning your financial situations post-separation.
Therefore, you can freely invest your money in the relationship, knowing there’s a backup plan. You can even make better plans without worrying about future happenings.
Cons of Prenup Deal:
A costly exercise
The process of creating a prenup document will be expensive. The wedding itself is a high-priced affair; on top of that, you’ve to pay for the legal services. That means you need to keep some money aside for a prenup deal in addition to your wedding budget.
No control over the unpredictable future
Creating an agreement that is conditional on future events is challenging. Besides this, there’s a variety of aspects that couples include in the BFA. It could be the age of their relationship, the number of children that they may have, etc. The paradox is we don’t have a crystal ball.
For instance, you’ve created an agreement based on two kids, but in the future, if you’ve four, then the situation could go worse.
Can be visualized as a lack of trust
Many consider the prenup agreement as a lack of trust between the partners, especially in people born and brought up in Eastern cultures. As this agreement is related to financial matters, many people presume that it is a materialistic or selfish approach.
Additionally, there’s an involvement of families too in the marriage, so the cold-head party might cancel the wedding, refusing the prenup proposal.
What is the best way to approach your partner for a prenup agreement?
There is no denying that no couple enters a marriage, thinking it is going to break down. But, it’s always wise to have a safe “exit plan” in the event of the worse situations.
The best way to approach your partner for BFA (without looking like a selfish human) will depend on your bond. You can discuss with them the way you present other matters like family planning, making a new Will, etc. Also, the above pros and cons will simplify your task.
You may (or may not) have seen relationships having a nasty ending, causing injuries physically, emotionally, as well as financially. And the only way out for all these things is being well prepared.