Asset Protection Advice

[pully]

I'm glad i met my woman when i was young, and we both had nothing.
Getting a pre-nup means "I don't completely trust you" There's no way around it, that elephant is always going to be in the room. It's not as bad as sleeping with her sister or best friend or anything like that, as in these cases you've already proven that you can't be trusted. A pre-nup is probably about as bad as getting busted perving on her sister getting changed.

with all due respect i disagree.
i look at it quite differently. when 2 people seek to form a relationship/partnership lots of things need to be clarified about all sorts of issues. these may include things like health/lifestyle/family/friends, and finances.

some people shy away from discussing their financial affairs or even aspects of their health. generations ago it may not have been acceptable for women to be privvy to their partners real assets. in fact i think it may still go on today to some extent.
for example a man dies and his wife finds he owes huge amounts of money, where as she had been led to believe they were comfortable.

i see a prenup, or whatever you want to call it as simply a document that lists what each party has prior/at the beginning of the relationship.
it adds clarity. from there it can also state in the event of changes in the relationship what is expected in terms of assets etc. this could mean divorce or death, or whatever.

usually this would be covered in wills, and that is also a good idea to get done at that time and then there is clarity.
i see it as being purely practical and not a matter of trust at all.

i can also see cases where the words... don,t you trust me? could be seen as potentially manipulative, or a form of emotional blackmail.

just my point of view. regards
st g v or fr

 

[Sheryn]

does anyone know of any clauses that need to be included? I had initial discussions with our lawyer about personal financial binding contracts, each person lists their assets with own lawyer
this is not about trust. we wouldn't be marrying each other if it were. it is about succession planning. i have substantial assets which i want to protect for my children, hence the pre-nup. i'm not protecting them from him but rather, crossing the t's for after my/our demise, just in case....GOOD ON YOU

I believe that there are lawyers who specialise in succession planning.

 

[Reality Cheque]

Charge for board and give a written receipt weekly.


RC

 

[vincenzo]

snip

I agree with what you wrote, they're all perfectly logical & fair reasons as to why people would want a pre-nup. I just think that it still doesn't change the fact that if you knew that the marriage would definitely last forever, 100%, you wouldn't want a pre-nup, hence a pre-nup shows a lack of faith in the marriage. You may doubt the marriage .1%, 10%, 30%, whatever, the pre-nup/lack of faith/trust is there in black and white.

with all due respect i disagree.
i look at it quite differently. when 2 people seek to form a relationship/partnership lots of things need to be clarified about all sorts of issues. these may include things like health/lifestyle/family/friends, and finances.

People can simply tell each other everything, and then trust each other.
some people shy away from discussing their financial affairs or even aspects of their health. generations ago it may not have been acceptable for women to be privvy to their partners real assets. in fact i think it may still go on today to some extent.
for example a man dies and his wife finds he owes huge amounts of money, where as she had been led to believe they were comfortable.

That's what i'd call secrecy/dishonesty, so the pre-nup only saves her if he's hiding things? I'd say that in this example, the pre-nup is handy in case you can't trust your partner.

i see a prenup, or whatever you want to call it as simply a document that lists what each party has prior/at the beginning of the relationship.
it adds clarity. from there it can also state in the event of changes in the relationship what is expected in terms of assets etc. this could mean divorce or death, or whatever.

Other than death, what changes could there be, unless the person isn't exactly your ideal partner? Someone's being dishonest in that case... do you trust them?

usually this would be covered in wills, and that is also a good idea to get done at that time and then there is clarity.

Clarity in that you know what the will will be before you even get married, because we can't trust that our partner is going to change their mind before we get around to making a will?

i see it as being purely practical and not a matter of trust at all.

It's as practical as an extended warranty - very handy if you don't trust that the product will continue to behave as it did before you brought it home.

i can also see cases where the words... don,t you trust me? could be seen as potentially manipulative, or a form of emotional blackmail.

It could be a gold digger trying to win you over, or it could be a someone that considers the two of you soul mates, asking why don't you trust me?
Do you trust what they are saying or not?

just my point of view. regards
st g v or fr

Sorry for still going on about it guys, it's just that i think you're kidding yourself if you say that a pre-nup is needed even though you trust the person 100%
Now if i was single, had say $1m+ net worth, and about to get married to someone that had say under $100k net worth, well i'd have to know her, her friends & family very well before thinking about getting married with no pre-nup... i'm talking ~5 years, at least! And of course i'd have to trust this person that i've come to know 100% If there was any doubts in my mind, then i wouldn't be getting married to her.
Call me old fasioned, stubborn, whatever, but i don't consider marriage as something where you can just give it go, and if it doesn't work out, who cares, the pre-nup looks after everything.

 

[RPI]

Hi

The Binding Financial Agreement, to be valid, has to be:
-signed by your lawyer and signed by her independent lawyer
-fully disclose all assets
-be fair, ie. justify as to why assets accumualted during the relationship are divided in a certain way. This takes specialist advice and it is possible for one partner to get negligble if assets and income were kept separate etc, but needs to be worded well.

Bloodline Trust
you could also look at bloodline trusts. This is a special sort of discretionary trust where capital is only allowed to be accessed by your children and grand children. The trustee may choose to distribute income to spouses of your bloodline but not capital. Also it is important should you be the director of the trustee company and you seperate from your spouse that you immediately resign as director and have another party perform that role until proceedings are finalised. This would obviously involve some costs but correctly structured bloodline trusts (unlike normal discretionary trusts) can be protected from family court proceedings.


Bloodline Trust as financier
A less expensive option may be to establish your own finance trust that is a bloodline trust. You would gift all of your equity to this trust prior to entering a defacto relationship/ getting married. This trust would then lend you (or your other entities) the value (plus some fees for setting up) of your equity in each property and have a registered 2nd mortgages over each property. Depending on the time period prior to becoming defacto etc. this may be a way to protect your original equity as all the capital that you had at the time of the start of the relationship was owned by the bloodline trust.


Bloodline trust for testamentary trust
It is worth investigating using this sort of trust to be established when you die as not only does it have great tax benefits if your kids are under 18 when you die (as a testamentary trust, any beneficiaries under 18 are taxed as adults) it also means that your kids won't lose any inheritance you leave them to their partners, though they can still share in the income while they remain married etc.

All of above is info only, not advice and you need to speak to a succession planning lawyer to structure it properly.

 

[pully]

an excellent answer. regards.

 

[kissfan]

I just think that it still doesn't change the fact that if you knew that the marriage would definitely last forever, 100%, you wouldn't want a pre-nup

Hi Vincenzo.

I would imagine that everyone getting married would think their marriage is 'forever'. The problem is, we human beings are a complex species and invariably, due to many reasons, many marriages end in divorce which has the potential for one of the partners to get all they can from the other.

I'm sure we all know of someone who has been through a marriage/relationship only for it to not turn out as they first imagined, and they probably thought that it was going to be 'forever'.

After the warm and fuzzies, the fact is a lot of marriages end in divorce.

Regards
Marty

 

[graisme]

thanks rpi for your very detailed answer which i'll have to mull over.

with all the to and fro-ing going on about trust etc, have none of you thought about your potential partner's kids going after your property if one of you/both dies? this is why i want a pre-nup, to protect my kid's inheritance.

 

[RPI]

I don't think trust has anything to do with it. It's more a case of insurance and surely it is much better to sort it now then mix finances in with the emotions of a break up. It's like dying without a will and then having siblings fighting over what's left.

You could always phrase it in a way that it is because I love you that is why we should do this. If we were ever to break up it would be devasting and the emotions that we would both have to deal with would be hard enough, if we had financial stuff to fight over would make it worse. If we approach the what if now then there is a much better chance of us still being friends if the worst was to happen.

You only have to look at statistics to see how many people divorce. No it's not going to happen, or don't you trust me, is the same as saying your not planning on having a car crash so don't get car insurance, not planning on dying so don't get life insurance etc.

Break ups are not inevitable, but are usually extremely hard, if you can have the financial stuff taken care of early the sooner you can get on with your lives.

D

 

[Ausprop]

they say in future marriage contracts may be for 7 years at a time. not a bad idea in modern society

 

[vincenzo]

We have car insurance because we can't trust that we or everyone else on the road will never make a mistake.

Yeah true, trust has nothing to do with it. No point relying on our wills, it's better to get a pre-nup, just in case someone changes their mind after one person dies or whatever. It's not like you can trust what someone says now and expect that to hold true forever. I mean just look at how many people divorce, it just prooves that so many people can't be trusted!!! It's insane to not get a pre-nup!





Wait a minute... Let met just think that through one more time...

Ah yes, got it now, pre-nups are most definitely not about a lack of trust

 

[Perp]

with all the to and fro-ing going on about trust etc, have none of you thought about your potential partner's kids going after your property if one of you/both dies? this is why i want a pre-nup, to protect my kid's inheritance.

I assume you're talking about the case where two mature people who already have children are marrying? I agree that this may be one of the rare circumstances where a pre-nup may be a good idea (particularly if the asset bases substantially differ), but that's quite different to the case of two young people both marrying for the first time.

It's like dying without a will and then having siblings fighting over what's left.

It's nothing like dying without a will. Dying is inevitable; relationship breakdown isn't.

You only have to look at statistics to see how many people divorce.

Considering statistics is fatalistic. If people looked at statistics, no champions would ever be created. Hillary would never have climbed Everest.

Statistics are irrelevant to individual outcomes - you're either going to be on one side or the other. If you're determined that you're going to be in the 50% whose relationships last, then what the other 50% are doing is really irrelevant. [Again, adding the proviso that there are occasions when you can end up divorced nonetheless, eg if you mistakenly chose a partner who becomes an addict, or doesn't share your commitment to the relationship, etc.]

No it's not going to happen, or don't you trust me, is the same as saying your not planning on having a car crash so don't get car insurance, not planning on dying so don't get life insurance etc.

No, it's not. You don't get to choose who the other people are who drive on the roads with you; but you get to choose who you go into a relationship with. We're also all prone to "brain fluff" moments, which on the roads can be expensive (had one myself recently - checked all around me before reversing, noted a pillar, then mysteriously drove right into it... ). And as stated earlier, you will die one day, whereas you need not ever experience a relationship breakdown.

 

[RPI]

Relationship breakdown may not be inevtiable but YOU can't control it. You say all you like about your partner but you can't control what they do and what the person is like now is not neccessarily what they may be like in the future.

I am sure there are loads of people out there who said that their relationship would never end, but their partner left, had an affair etc. It can come straight out of the blue for that person. Your partner may not even plan on falling in love with someone else, getting bored and needing a change. But it happens, it happens everyday to loads of people who never thought it would. Unless you plan on being able to control your partner than you can't say you need not experience a relationship breakdown. It takes 2 people to guarantee that and you can't control the other person.

 

[wylie]

You have hit the nail on the head with your post RPI. You can only control your actions and reactions.

There is no way would I go into any relationship with substantial assets without a pre-nup.

There are people who look for rich widows/widowers and divorcees. My grandfather had a woman move in with him when he was about 70. I am quite sure she loved him for himself . He was so lovable . I am sure she wasn't just wanting a house to live in for the remaining years .

 

[Perp]

Unless you plan on being able to control your partner than you can't say you need not experience a relationship breakdown. It takes 2 people to guarantee that and you can't control the other person.

True.

But I do think that too many people view it fatalistically as something that "just happens", and it becomes a self-fulfilling prophecy. The "bad old days" where people were stuck in abusive relationships because it was socially/legally unacceptable to divorce were definitely bad, but I think the pendulum has swung way too far the other way, where people are far too blasé about the commitment they're (supposed to be) making. Some people seem to give up far too easily - and I agree that you can't stop your spouse being one of those people. (Though your due diligence on a spouse should be finding out their character, and their seriousness about the commitment, which reduces but doesn't eliminate the risk.)

I think what I'm trying to say is that it seems a trend to view your life (in these two regards) as:

A journey of accumulating assets during which relationships will come and go

vs

A journey with your life partner during which assets will come and go

And making a pre-nup seems to me like making a vote for being in the former group, when I'd rather be in the latter.

I acknowledge that this may be completely irrational, and that hubby and I started out with roughly equal assets and no previous children, so I'm in a position where it's easy to take this position. When you have substantially differing asset bases and/or there are children who are not the offspring of both parties involved, I can see why pragmatism may override ideology.

 

[pully]

this is what i like about this forum, we can all express our views and we do not all think alike.

the rich tapestry of life.
i think it would be wonderful if every person we trusted were trustworthy.
unfortunately in some cases despite our best judgement that proves not to be true.

sometimes abuse/damage comes from people who are the nearest and dearest, not strangers. sometimes it is not possible to see trouble coming.

the idea of thinking and believing and expecting the best of everyone is noble but for some of us we prefer to add a little more protection just in case.

these written agreements add that extra layer of certainty, potentially. however i am sure like wills there are cases where any document can and will be challenged. but that would start a whole new thread.

regards

 

[JamesGG]

My old man used to say (and presumably still does) that in the highly unlikely event of him being on the wrong end of a divorce, he'd just give Mum whatever she wanted. He knew how to get it all back again - and much quicker than last time - and would rather get something like that over and done with asap. Those things are messy enough without fighting about the money.

I've still gotta find a girl silly enough, so it's really not an issue for me yet. Generally speaking though, the romantic in me doesn't like prenups. Vincenzo said it's a matter of trust, and I tend to agree.

 

[wylie]

My old man used to say (and presumably still does) that in the highly unlikely event of him being on the wrong end of a divorce, he'd just give Mum whatever she wanted.

My hubby is the same. If we split, he would walk away. Money is not a motivator for him at all. I think my husband and your father are unusual.

I've still gotta find a girl silly enough, so it's really not an issue for me yet. Generally speaking though, the romantic in me doesn't like prenups. Vincenzo said it's a matter of trust, and I tend to agree.

Like ozperp, we both entered our relationship with no "baggage" and similar amounts of assets.

It will be interesting to see if you feel the same when you meet someone who may bring to your relationship only the clothes she stands up in . I am a romantic as well, and don't like the whole idea of pre-nups, but with substantial assets, I would think that I would be wanting one.

Unless we are each in that position, we probably will never know just how we would feel at the time.

The other thing is that even if a marriage ends and the split is amicable, the new partner in either case can turn all the good upside down.

The man who is steering my parents through their estate planning has said that he sees many times that couples split amicably, but very, very often it is when one gets a new partner that things turn sour.

We are happy as pigs in mud and have built up what we have together, but I would feel differently if something happened to my hubby and I met someone who had nothing because he liked "toys" or had lost everything to his ex-wife. Meeting someone new with nothing much to bring to a new relationship may not even be his fault if he has been taken to the cleaners or has little children and had to hand a lot over to an ex-wife.

It might be no reflection on his character at all. I hope I never, ever have to contemplate having to decide whether to broach the subject of a pre-nup.

 

[vincenzo]

Relationship breakdown may not be inevtiable but YOU can't control it. You say all you like about your partner but you can't control what they do and what the person is like now is not neccessarily what they may be like in the future.

I am sure there are loads of people out there who said that their relationship would never end, but their partner left, had an affair etc. It can come straight out of the blue for that person. Your partner may not even plan on falling in love with someone else, getting bored and needing a change. But it happens, it happens everyday to loads of people who never thought it would. Unless you plan on being able to control your partner than you can't say you need not experience a relationship breakdown. It takes 2 people to guarantee that and you can't control the other person.

Exactly, you can't control it. You just have to trust them. If you don't, then get a pre-nup.

You have hit the nail on the head with your post RPI. You can only control your actions and reactions.

There is no way would I go into any relationship with substantial assets without a pre-nup.

There are people who look for rich widows/widowers and divorcees. My grandfather had a woman move in with him when he was about 70. I am quite sure she loved him for himself . He was so lovable . I am sure she wasn't just wanting a house to live in for the remaining years .

What, you don't trust her? I agree, better get a pre-nup.

I'll shutup now, as my level of broken recordness is getting excessive.

 

[fokas]

Anyone have any links regarding Government or ATO rulings on these matters?

ETA: Googling and I aren't playing nice atm.