The British royal family isn’t known for its history of happy marriages, but Prince Harry and his fiancee, American actress Meghan Markle, are planning to beat the odds.
Despite rumours Harry was considering a prenuptial agreement, the Daily Mail reported in March that the couple would not be signing paperwork to protect their assets. “He’s determined his marriage will be a lasting one, so there’s no need for him to sign anything,” a source told the tabloid.
Prenuptial agreements are common fodder for gossip-mongers, and they’re often discussed in the context of high-profile Hollywood marriages. But anyone can have a prenup if they want one.
In Australia, a prenup is a colloquial term for a type of “binding financial agreement”, or BFA, which can be drawn up under the Family Law Act.
These agreements are used by people who want to prescribe how their assets will be divided if their relationship fails.
So who gets a prenup, and is it worth it?
The case for
Binding financial agreements can help couples avoid the time and expense of a break-up proceeding through the Family Courts.
They are particularly common when one person in a relationship has more money or property than the other, says James Turnbull, a partner at Berry Family Law. “Often they occur in second marriages, where people are later in life and they’re trying to preserve assets,” he says. “People have been burnt and they don’t want to be burnt again.”
BFAs can also be used in cases where one person stands to inherit a significant amount of money or business that families do not want divided in the event of a break-up.
Turnbull says successful BFAs work best when they are carefully considered and when both parties are open to the idea. “It’s all about communication and communication as early as possible. If the negotiation occurs slowly, it takes a bit of the hurt out of it.”
The case against
Binding financial agreements are contracts, which means they can be set aside by the courts if they are deemed unfair.
“There’s a big division within the legal profession as to whether those agreements are worth the paper they’re written on,” says Heather McKinnon, a family law expert for Slater and Gordon.
Last year, a landmark High Court ruling found in favour of an eastern European woman who fought to overturn the prenup she signed shortly before her wedding to a much older and wealthier Australian property developer. The court said the groom “took advantage” of his bride’s vulnerability, prompting some family law experts to argue that prenups are too difficult to enforce.
McKinnon says prenups are not an insurance policy for couples, because contract law assumes the two parties have equal bargaining power. She argues that there are few circumstances where a couple would want a prenup and have equal bargaining power – because of age, wealth or other differences.
McKinnon says there are no official numbers regarding just how many prenups are signed in Australia, but adds they are “very rarely used”.
The Family Law Act is enough to sort through any differences and take into account contributions made during a marriage. “My view is that a BFA is really something that was brought in out of the American system, but they’re not really standing up in Australia,” she says.