Well-drafted pre-nups (Financial Agreements) can be a useful tool to help separating couples avoid seeing the inside of a courtroom.
They can specify, in advance of separation and/or divorce, exactly what is to happen financially, potentially saving years of litigation and thousands in legal costs.
But negotiating them can be difficult. And sometimes family lawyers see Agreements which are entirely one-sided – they protect the interests of one spouse only, making no provision for the other spouse at any time, or in any circumstances, if the relationship later breaks down.
So, what do you do if you are given a Financial Agreement which provides for what you fear is unfair to you, now or down the track?
While you might feel tempted to simply tear up the document, instead look upon the Agreement proposed as a platform from which you can negotiate a more considered outcome.
The discussion which follows is likely to have 2 parts – the negotiation about the terms of the Agreement which occurs via your and your partner’s family lawyers, and the conversation which occurs directly between your partner and you around the kitchen table.
The relationship with your family lawyer will therefore be vital here. You do not have to see any lawyer your partner introduces you to, unless you are comfortable with that, and sure that they are experienced in negotiating Financial Agreements, and independently and faithfully representing your interests. Be sure to choose a family lawyer you trust, who you feel you can work with, who will give you direct and practical advice, who is creative in their problem-solving, and who is going to approach the task of re-shaping the Agreement with sensitivity. Getting this part right is critical, as you are not wanting the legal steps to bring your relationship under undue stress.
As to the discussions you have directly with your partner, here are some points to guide you:-
- Be frank. Now is not a time to sugar coat things. If you are concerned about the Agreement, and fear that it will disadvantage you over time, that will need to be said. Not only will it need to be said loud and clear, it will need to be said early – don’t let it get to the point of signing before raising your concerns.If you and your partner have discussed plans to have children, to move interstate to pursue your partner’s career, or to take 6 months off work to renovate the property in which you are living, these things will need to be raised – undertaking these key steps in a ‘shared’ life together mean that you are being asked to commit to the relationship, and ‘put in’ to it, but are being told that your commitment has no present or future value. Use these examples, to illustrate how, on one hand, you are being asked to commit to shared objectives, but that how the Agreement is drafted means that this commitment will count for nothing.
Lots of people say that they will simply sign an Agreement, and try to change their partner’s mind about it down the track. That can be dangerous, as there can be no guarantee of securing agreement about that later on. Remember, if that strategy does not come off, you will be bound by the Agreement.
- Get to ‘why’. The Financial Agreement is being raised for a reason. Perhaps your spouse has been through a difficult breakup before and does not want to repeat that experience. Or perhaps they have inherited wealth, and seek to preserve it (often seen in ‘family business’ and ‘family farm’ cases). Understanding why it is that your partner wants the pre-nup can help you address it.If the heart of the matter is that your partner wants to protect an inheritance, you may agree with that, and be able to confirm immediately that that concept is common ground. That common ground may be the chance for you to raise your ‘why’ as well – what you want to achieve with the Agreement. Reassurance that your partner’s objective is understood and acknowledged by you can disarm the situation, and enable a more productive discussion about how that objective can be achieved while also achieving the things that are important to you.
In my experience, most people pressing for a Financial Agreement are seeking a ‘known quantity’ – they want to know what will occur (their obligation) if the relationship ever breaks down. Here, you are ‘selling’ what you are prepared to do – provide your partner with that certainty, the certainty of a defined outcome if separation ever occurred, in exchange for you having that certainty as well.
- Invite objectivity. If the effect of the Agreement is that you will receive a pittance for an investment of your lifetime in a relationship, invite your partner to stand in your shoes. Would they give up their career, move away from home, raise children, and endure all of the other trials and tribulations that relationships inevitably bring, for the outcome proposed? If ‘no’, then invite them to accept that the Agreement holds no advantage for you, and will need to be reviewed.
- Give worked examples. The blinkers are often on when the terms of the Agreement are being negotiated. The focus is the arrangements today, when both parties are healthy, in the workforce, and earning good income. But what about 3, 5, 10 and 20 years’ time? What does the Agreement look like once there are 3 children, and one party has been out of the workforce, caring for those children, for a decade, or where one party is in poor health?These situations are not far-fetched, and can really happen – use them to illustrate how the Agreement might be unfair over time. Your family lawyer will be able to help you with these simulations, looking at points in time, how life might look like at that point, and projecting outcomes that a Judge might award at those points. That is a useful yardstick in measuring the outcome in the Agreement. Projecting, as much as is possible, the future, will help ‘reality test’ the Agreement’s provisions. This can help agitate for the Agreement to be amended.
- Sell yourself. It is often said that commercial deals are not durable unless each party gets something out of them. Pre-nups are no different. While one party may be bringing money to the relationship, the other may be bringing other qualities – their personality, their support, their encouragement, their companionship, and their love. They may also be bringing their preparedness to undertake a future role – as home-maker, as parent. Though they can’t be counted in cash, these things are valuable too, and if they are being contributed openly and generously by one party, then that will need to be recognised in some way.Bricks and mortar assets are not the only things which count when it comes to relationships. For the Agreement to last, and for each party to be motivated to commit to shared hopes, each party needs to get something from it if, despite best efforts, things don’t work out. Make that point.
- Be creative. Would it disarm your partner if any financial provision for you only commenced if your relationship went on for X years? What about a sliding scale, which sees the outcome to you alter with the passage of time? How about a ‘cap’ to any outcome, cast as a defined percentage of any jointly owned property acquired during your relationship? There may be an approach that serves both masters – neutralising your partner’s concerns, while also recognising your future input (as income-contributor, parent, support-person, or whatever form that might take in your relationship).
The content of Financial Agreements is flexible, and can accommodate concepts like these. There are a number of ways of achieving ‘balance’ between the things that are important to each of you, and you and your partner can craft a solution that works for you and your relationship.
Once you’ve raised your concerns, and have opened the door to a discussion around the terms of the Agreement, the trick will be to keep the dialogue moving towards a Financial Agreement on which you are both happy to sign off. You know your partner better than anyone, so draw on that experience. How have you resolved problems in the past? How are you most likely to get traction in discussing the Agreement?
If things begin to derail, using a counsellor to talk about each of your concerns (and therefore, reasons for wanting the Agreement, or particular outcomes in it) can help. Sometimes having an open discussion with a neutral third party can help find the ‘sweet spot’, terms that everyone can live with. Alternatively, what about a mediation, where a neutral professional facilitates discussion around what the terms of the Agreement might be, or a collaborative process, whereby your lawyers and you meet to identify your objectives, and any common ground? There are no wrong answers.
We Can Help
At BGm Family Lawyers, we are experienced with all facets of Family Law including dealing with Financial Agreements (pre-nuptial agreements).
If you need assistance drafting a pre-nuptial agreement or interpreting a pre-nuptial agreement before you sign, get in contact with our dedicated team on 1300 246 529.
