When you’re ready to tie the knot with someone, divorce is the last thing on your mind. But even if you think it’s not romantic, it’s a practical and clever way to protect your wealth and assets – even if you don’t consider yourself rich.
Known in Australia as a binding financial agreement (BFA), a prenup is no longer reserved for celebrities. They are increasingly used by couples that have already gone through one or more divorces, individuals that have children and want to safeguard their inheritance or people who own a large business that they want to protect.
Plus, getting a BFA is like insurance: it ends up much cheaper than a divorce could cost you. According to the Australian Institute of Family Studies, there were 49,510 divorces granted in 2020. The average cost of a divorce is between $50,000 and $100,000 and a BFA costs around $5,000 to $15,000.
But before you do the maths, here are some stories and insights about the relationship between humans and money.
Money talk is never just about money
Money talk is awkward. After all, in the western world gender equality only came about in the 1970s.
And the idea of a romantic marriage, as opposed to an economic endeavour, only came about three centuries ago.
As humans, we haven’t had much practice at this sort of talk, even though we live in a society run by money, though also a society in which attaining financial security is hard.
Communicating with your partner about money might require practice from both of you but, in our capitalist world, it’s important to know the values each puts on money. You are about to sign not only a romantic agreement but also a financially and legally binding one. Taking charge of your money is smart and empowering.
A BFA is a great way to look after your finances and make sure you maintain that financial security in the event of a divorce or if your partner passes away.
And it can be especially beneficial to women who often find themselves financially strapped after a divorce.
A BFA helps you eliminate doubt
We’ve all heard horror relationship stories, and that doesn’t mean that you could be one of them. But they are cautionary tales that make a strong case for getting a BFA.
Private Investigator Richard James of Rivica Investigations has plenty of those. “I was once hired by a woman to investigate his fiancé’s suspicious behaviour only to find out that he was moonlighting as a drug kingpin.”
“And sadly,” he adds “I’ve seen my fair share of men leading double lives. Two wives, two houses, two sets of children, the whole deal.”
These cases happen all over the world. As reported by The Guardian, one woman had to go to court because he had to pay mortgage payments for her late husband’s mistress’s home.
Money matters see no end in human dynamics.
Is a Binding Financial Agreement worth it?
In Australia, a BFA covers your property, income, debt, liability, superannuation, inheritance, and any businesses owned.
Basically, based upon agreement, it’s a fair and transparent way to enter a relationship. The basis of the BFA is what’s yours is yours and what’s mine is mine and everything else is split equally.
It can be an awkward conversation, but if you love and respect each other, it shouldn’t cause issues in your relationship. On the contrary, it should clearly show the bond and values. Plus, at the beginning of a relationship people tend to be fairer – so that’s also something worth thinking about.