Preparing for the unthinkable: How to bring up a prenup

Talking about binding financial agreements isn’t always sexy, but it should be.

If you’ve never heard of a binding financial agreement, it’s essentially Australia’s version of a prenup (or postnup). It’s a document that outlines assets and debts individuals bring into a relationship and how they’re treated in the event of a relationship breakdown. It can include things such as cash, shares, properties and mortgages.

Binding financial agreements can be useful for anyone seeking to protect their assets, regardless of whether they are legally married or in a de facto relationship.“It’s particularly beneficial when there’s a financial imbalance – for example, when people either have a lot of debt or a lot of money,” financial therapist Jane Monica-Jones says.

They might also be helpful for blended families or for people from cultures where helping family members financially is common. People who’d like to protect an inheritance or own a business could also consider one.

They can serve as a constructive tool to establish clarity and financial safety. It might help couples manage any future conflict respectfully. “In a way, it is an agreement to protect the relationship,” says Monica-Jones.

“Of course, we don’t want things to end. But it brings a level of psychological safety to our financial experience. It means we can be a little more explicit, upfront.”

‘We have to be tender, safe and lead with care. Psychological safety around money can often be very painful.’

Talking about a binding financial agreement with your partner could be a simple or a very complex conversation. Monica-Jones has been a financial therapist for 17 years, working with individuals on their relationships, behaviours and any trauma when it comes to money. “I get scared about it, too,” she says.

The exact number of binding financial agreements in Australia is difficult to determine due to the lack of publicly available data. In the United States, about 15 per cent of couples have a prenup, according to a 2022 poll.

So what is Monica-Jones’ advice going into the conversation? It’s best to prepare, so you can have the conversation clearly and calmly.

“First, you need to understand why this is important.” That could be anything from your personal values to financial responsibility and children from a previous partnership.

Another thing you need to consider is that you may or may not have disclosed your assets and liabilities, and so you’ll need to do that first.

It’s important to separate the financial logistics of a binding financial agreement from the emotional commitment of a relationship. You can make it clear to your partner, “it’s not a reflection of my love or my care for you”, Monica-Jones says.

She recommends scheduling a dedicated time to discuss a binding financial agreement in a private setting. Don’t just spring it on your partner. Give them the opportunity to prepare and research, too.

And remember, you don’t have to make any decisions in one conversation. “It might take some time to get further information or contact the right lawyers.”

During your conversations, be curious rather than defensive. That goes for both parties.

“We have to be tender, safe and lead with care. Psychological safety around money can often be very painful. Money is so often identified with levels of safety, trust and security, things which are a physical experience, but they can move into the emotional, as well.”

Have a conversation when things are emotionally neutral. Don’t even think about having it in the middle of any conflict.

If a couple is having difficulty navigating these conversations, Monica-Jones suggests consulting an expert. That could be a financial adviser, a financial therapist or a family lawyer. If you are bringing up a binding financial agreement and your partner is resistant or feeling overwhelmed, you can ask them to choose the type of professional with whom they’d feel comfortable discussing this further.

Conversations about binding financial agreements are common in Monica-Jones’ practice. “It can be hard and uncomfortable, that’s critical to understand. But it can also be a really great part of healing some of the older stuff in our own experiences around safety, trust and a sense of belonging, if it’s done well,” she says.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.