Lawyers say ‘bank of mum and dad’ are driving rise in ‘prenup’ requests
To many, a 'prenup' agreement is a Hollywood concept, but the harsh economic reality is driving more Australians to get them. With reliance of the 'bank of mum and dad', some parents are also seeking assurance that the gift they give does not disappear in a relationship breakup.
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00:00 Housing affordability is declining.
00:02 There is uncertainty in the economy
00:05 and people are really looking at ways to secure what they've earned.
00:09 If you're tying the knot, this is the last place you want your marriage to end up,
00:13 but it seems more and more Australians are taking precautions.
00:16 We're about to visit a law firm that has seen a 79% increase in BFAs,
00:21 binding financial agreements, essentially prenups,
00:25 and they're right across the road.
00:27 So what is behind this rise in BFAs?
00:30 The bank of mum and dad, who are transferring their wealth now rather than as part of the will.
00:35 There's couples who have got an imbalance of wealth
00:39 and the other major group would have to be blended families.
00:42 There's no registry of BFAs, but several private practices estimate requests doubled since the pandemic.
00:48 The Law Institute of Victoria confirmed the rise but put the increase lower.
00:52 With median house prices almost 36% above pre-pandemic levels,
00:57 high inflation and a spike in divorce applications,
01:00 you can see why BFAs are on people's minds.
01:03 And the bank of mum and dad can demand what they like,
01:05 being now ranked between the fifth and ninth largest mortgage lender.
01:09 Antoinette Segaria tied the knot in 2019.
01:12 She and her wife are happily married, but they're getting a BFA,
01:15 driven by her job as a real estate agent,
01:17 where she often helps couples sell properties when things go wrong.
01:20 I have the benefit of knowing exactly how expensive
01:24 and how difficult and challenging these situations can be.
01:28 The uptake of BFAs might be increasing,
01:30 but there is still plenty not taking the precaution.
01:32 Youth sociologist Julia Cook has studied how borrowing money from family to buy a home
01:37 can affect relationships and found of 80 participants in her study, none had a BFA.
01:42 It's not very nice if you're a parent to be talking to your child
01:47 about what might happen if they divorce their partner.
01:50 There are some difficult conversations that have to be had,
01:53 but I would much rather have them from a respectful place
01:57 and a point where we do love each other and want the best for each other.
02:01 [BLANK_AUDIO]