Why you need a prenup

By Lauren Leisk, Yahoo7 Moneyhound Updated February 8, 2013, 8:00 am

A prenuptial agreement should at least be discussed prior to marriage, it could save you more than just a few arguments in the long run.

When the good intentions of "for richer or poorer" implode in acrimony, a prenup can take the heat out of arguments over who gets what.

Rumour has it that Russell Brand had the potential to take $20 million out of his recent divorce from Katy Perry. For Kim Kardashian a prenup wasn’t so much designed as financial protection but rather as a gag order on her now ex-husband Kris Humphries.

While the average Aussie couple doesn’t have as much cash or dirty laundry as embattled celebrities, there are benefits to a prenup that provide protection for your assets when "I do" becomes a bitter "I don’t!"

What is a prenup?

A prenuptial agreement is a legally binding agreement that protects tangible assets such as money, property and other investments should the marriage or de facto relationship end in a bitter split. It can also make provisions for child support, but only if you have been married – the law does not provide for child support in de facto prenups.

Related: The true cost of divorce

In order to implement a prenup, each party must be legally represented. The solicitors then take detailed instructions from the parties about their financial circumstances, future intentions (e.g. children), contributions already made to the property, estate planning requirements and the agreement they wish to enter.

Valuers and accountants may be required to assess the value of your property, liabilities and financial resources. The agreement is finalised and signed by the parties and becomes legally binding.

If the worst does happen and your marriage ends up in divorce, the cost of not having a prenup in place could be far more costly than the expense of protecting your assets beforehand.

Related: Wedding money saving tips

Perhaps the most highly publicised divorce in recent years was that of Paul McCartney and Heather Mills. After their marriage fell apart in 2006, it took more than two years for a judgment to be handed down in Mills’ favour for £24.3 million pounds, plus annual payments of £35,000. Surprisingly, the former Beatle wasn’t too fussed about handing over the millions as he again bypassed a prenup with his newest wife
Nancy Shevell.

Prenuptial agreements are still a topic of contention. While you have every right to want to protect your assets and investments when heading into a marriage, the mention of a prenup has the potential to set your partner on edge. Familiarise yourself with the processes involved in creating a prenuptial agreement before you bring it up, and remember that a bit of paperwork before the wedding could save you a lot of cash in the long run.

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