Rich parents drive rise in prenups

By Lucy Dean – Wealth Reporter

11 March, 2026

Against the backdrop of what’s being described as the greatest transfer of wealth the world has ever seen, pre-marital financial agreements are no longer viewed as something for celebrities or the ultra-wealthy.

Parents are increasingly pushing their kids to sign binding financial agreements to protect inherited wealth. Michaela Pollock

Mr and Ms Daily* met in 1996 and married in 2005. But not before signing that most romantic of documents – a binding financial agreement, or prenup, as they are known in the United States.

The agreement stipulated that what was his ($404,282) should be retained in the event of a split; ditto for her $32,287. Everything acquired along the way would be divided equally.

The couple split in 2018, and Mr Daily – whose wealth had grown significantly – expected the binding financial agreement (BFA) to be upheld.

The Family Court was less convinced because by the time the couple separated, they had two children, and the BFA did not contemplate what should happen if children were involved. As Ms Daily was the primary caregiver, to uphold the agreement would leave her in hardship, the court found. So he was required to pay her $741,634.

While the sums are relatively small and circumstances are specific, it’s the sort of scenario that could play out many times over as trillions are passed from the Baby Boomers to their Gen X children and Millennial grandchildren.

Lawyers say BFAs have become a tool de jour for families attempting to quarantine wealth in the event of relationship breakdowns.

Often, the pressure to sign a BFA is brought to bear by the parents of the betrothed. “We’re certainly seeing more clients coming in who are saying: ‘Mum and Dad want me to have this agreement,’” says family lawyer Kasey Fox of Farrar Gesini Dunn.

They are a “standard tool for safeguarding assets”, she says.

Of course, such discussions must be approached with delicacy and while Vincent says it is her job to keep couples together, couples do sometimes part ways in the process.

Jacqueline Vincent of AF Legal says BFAs are becoming ‘standard tools’ for safeguarding assets.

And as the Daily case shows, for the bank of mum and dad, their “protected” gift is only protected as long as the marriage remains static. And even if there is a clause designed to protect gifts and inheritances, it can be overridden by the court’s duty to ensure the caregiver of the children isn’t left in hardship.

The Daily case generated a lot of attention in legal circles because Mr Daily sued his lawyers for breach of contract and negligence and later lost in the High Court.

A BFA is a private contract under the Family Law Act that outlines asset division during separation. Agreements can be entered before marriage, during marriage or after divorce. The law extends to de facto relationships.

We spoke to a range of lawyers, mediators and counsellors, and what they say is that establishing a BFA comes down to two things. The first is understanding the way each

party relates to money, and the second is drafting with a spirit of generosity, not of entitlement.

Fox says the rise in BFAs is partly a function of families realising that well-intended loan agreements they’d made or planned to make to facilitate their kids’ entrance into the property market are legally flimsy.

Take the example of a Family Court of Australia order in January last year, which ordered a man to pay $5,886,842 to his former wife.

That reflected 100 per cent of the couple’s known net non-superannuation assets, and was a result of an “extensive history of non-disclosure and breaches of court orders”.

Additionally, the husband and his parents tried to represent to the court that they had loaned the husband $5.2 million and requested $7.6 million be repaid to them (including interest) as part of the final property settlement.

Yet by the end of the trial, the parents had modified the claim to state that they had lent the husband the equivalent of $810,000, and that they were owed the net proceeds of the sales of two properties.

The court found the evidence was deficient in several respects, and that as witnesses, their evidence was “unreliable and not truthful in places”. Their claims were dismissed.

Kasey Fox says more couples are seeking BFAs, often on the urging of parents.

While this is an extreme case, Fox says that if a relationship ends, courts will often set aside “loan agreements” if they haven’t actually been treated like loans. For example, if the children haven’t been making regular – if any – repayments to the parents.

The rub is that if families actually structure the loans appropriately, many banks will reduce the children’s borrowing capacity to account for this.

“Really, the only way to protect the money if you’re giving some to your child, is through a BFA,” says Fox. “You can try going a loan agreement or a trust, but the court can look behind all of those agreements and see what the real situation is.

“So if you’re giving money and the child’s not going to do a BFA, you probably need to accept that you can’t control what happens there. The reality is, if they do separate, it’s likely going to be one of the things that’s available for division.”

There are two ways she’d suggest families use BFAs in this situation. The first is to have the BFA outline where the gifted funds are linked to assets held in one party’s sole name. Then, that party needs to ensure they always have the equivalent of those assets in their sole name, so it’s straightforward if a split were to occur.

“Another way is to have an amount in the agreement. You can say, ‘Scott started with $500,000 more than Sally. In the event they separate, before they divide their shared assets, he will receive the $500,000 back, and the remainder will be divided 50:50.’”

But the story doesn’t end there, adds Vincent, referencing the Daily case. BFAs can be set aside if there are material changes in a couple’s circumstances in the years between the signing of the document and the relationship ending.

From lawyers to therapists

Behavioural economist Stephen Whyte has studied how wealth and education affects how people choose partners. Hypergamy, or the idea of marrying into a population of people who are wealthier than yourself, is nothing new, he says.

But when it comes to the bank of mum and dad pushing their offspring to sign BFAs, it may not only be about wealth preservation.

Stephen Whyte says parents are often motivated by a desire to teach their children about good financial decision-making.

“I would say that these types of parents are engaging in some form of behaviour change intervention with their offspring. Written agreements such as this are usually used in finance or investment for consumers who are credit risks, or who are yet to demonstrate means and commitment for repayment,” says Whyte.

“It’s behavioural economics 101. I think the parents aren’t just lending money, they are doing it with an aim to teach a lesson, or to change or instil a behaviour.”

Kasia Gordon of The Couples Clinic has seen a marked increase in discussions about these topics in the past year – usually involving couples with children and assets who are re-partnering.

“We’re seeing more couples talking about financial issues … that maybe they didn’t have to a few years ago. But there are a lot of imminent pressures – the cost of living, interest rates, economic uncertainty,” she says.

But the chats can still be fraught.

This may be the case if one partner has come from a previous relationship or family where there was financial strain or a nasty split. Meanwhile, their partner might see their finances as representing freedom, and may enjoy being generous.

“When couples focus on trying to problem-solve at the top end by deciding on a budget or BFA without discussing the ‘why’ behind it, it can lead to a lot of conflicts within the couple.”

And while any arrangement can technically work, Melissa Ferrari, a couples counsellor and psychotherapist, agrees that whether a BFA’s effect on a relationship comes down to the level of understanding around it.

“When you add another influence – such as the bank of mum and dad – the emotional landscape becomes even more complex. Now there are not just two people in the conversation, but a third party whose financial interests and expectations may be shaping the discussion,” she says.

These are often difficult conversations, says couples therapist Melissa Ferrari. Fi Mims Photography

Bernie Bolger, psychotherapist and principal at The Mediation Collective, works in collaborative law, a process by which she meets with the couple individually to understand their goals and concerns, before meeting with them together, and then with the couple and their lawyers too.

“It really is a values- and needs-based discussion,” she says.

“I’ll talk to them about how important financial security is. And I’ll ask: ‘How important to them is private school? Living in a nice house? What is important to them?’”

Then, she will try to draw out how to meet those needs in the event of a divorce or split.

She warns that starting from a position of numbers, percentages and entitlement can trigger conflict.

She recalls an instance where a wealthy father who had bought a property for his son and contributed to his super wanted Bolger to work with his son and soon-to-be

daughter-in-law to draw up a BFA. He wanted the house and super to be totally protected.

But both the son and daughter-in-law were artists on very modest incomes.

“I said to the dad, ’What you’re doing is you’re asking your future daughter-in-law to sign away any entitlement she has to even an increase in the value of the home.

“‘She’s not going to sign that. No lawyer is going to advise her to sign that. Because basically, she’s going to be homeless.’”

Eventually, the couple agreed they would share equally in any uplift in the value of the property, plus share the super equally. Any joint property bought during the union would be shared, and any future inheritances would be ringfenced. “The aim was to give the wife some future financial security while protecting the family’s assets,” says Bolger.

It may seem natural to those bringing more wealth into the relationship to protect it. But she will try to remind both parties that there is an opportunity cost to marrying into a wealthy family too.

“A lot of us create our wealth by starting small, getting a mortgage, paying off a mortgage and 20 years later, you have a property. That’s the biggest asset most families have,” she says.

“If you marry into a wealthy family, you don’t have that. You can potentially be living a nice life in a nice house, but when it comes to separation, you realise that that house is not a joint asset. That house is owned by one person, and you’re out on the street.”

Couples need to figure out how they will navigate this.

“It’s not about: ‘You are going to get X per cent of the family wealth.’ It’s: ‘What does a reasonable life look like?’”

* The pseudonym used by the court