Australians are becoming more protective of their finances when it comes time to getting married. Attitudes towards prenuptial agreements are changing, with more people thinking they make sense.
According to a recent survey of 1,000 couples conducted by ME Bank, more than 74 per cent of Australians think that it’s fair to have a prenuptial agreement, but only 18 per cent actually have one.
ME money expert John Powell says: “A prenup is not anti-relationship – it’s only relevant when the relationship is over.”
Meanwhile, the Financial Planning Association is promoting the idea of a ‘pronup’ – a plan setting out a couple’s financial goals – as a better way for couples to approach the financial aspects of a relationship.
A prenuptial agreement, also referred to as a financial agreement, is a contract that protects the assets of partners in the case of divorce or the breakdown of a de facto relationship.
In a note to clients, lawyer at Macpherson Kelley, Carly Burgess says: “In Australia, financial agreements can be made before, during or after a marriage or de facto relationship. They can deal with how all or any of the property or financial resources (personal and business assets, inheritance whether received or not) of both or either party will be dealt with, and spousal maintenance.”
Having a prenup is more common among millennials, with one third of couples aged between 18 and 24 years currently having one. This is the highest percentage of the age groups that were surveyed.
The change in attitudes towards prenuptial agreements can be due to the increase in age when people are getting married, meaning they are more likely to have assets worth protecting.
The most recent Australian Bureau of Statistics data shows that the median age at marriage in 2017 was 32 years for males and 30 years for females. This is an increase from 29.7 years for males and 27.5 years for females in 1997.
On the other hand, only 10 per cent of respondents aged 40-54 years of age have a prenup, reflecting the change in values and priorities between the generations.
Powell says: “It’s a generational thing. Younger couples are ditching traditional ideas about prenups and opting to protect themselves financially.”
The ABS data from 2017 found that there were 49,032 divorces granted in 2017 compared to 112,954 marriages. This is an increase of 5.2 per cent from the previous year.
Interestingly, the median age of males at divorce in 2017 was 45.5 years of age and 42.9 years of age for females which are part of the age group of respondents that had the least amount of prenup agreements.
ME’s research revealed 47 per cent of Australian couples consider prenuptial agreements to be inappropriate in a relationship based on love.
Powell says: “These findings indicate strong beliefs about the underlying meaning of a prenup, and the emotional aspect may explain why so few couples have one in spite of most thinking they’re fair and make sense.”
Clearly, prenuptial agreements are not for everyone. The Financial Planning Association of Australia (FPA) recommends an alternative, a pronuptial agreement.
Chief executive of the FPA Dante De Gori says: “A prenup is suited to wealthier people and is all about putting in place boundaries before your relationship goes any further. It is a case of ‘what’s mine is mine and what’s yours is yours’.”
The FPA refers to a pronup as a written plan that couples put in place with a financial planner to set out their future and plan their financial goals. In fact, it is the opposite of a prenup as it is a positive plan for your future rather than something to be used in a relationship breakdown.
De Gori says: “Many couples don’t speak about their finances and quite a number of Australians don’t share that as a couple. The reason we are delivering a pronup is to address the topic of finances and put together a financial plan as couples.”