The tough decision these parents are making to protect their family’s wealth from divorce – even though their youngest is only NINE… and the children won’t get any inheritance if they refuse to play ball

Ruby McLellan earned the title of ‘Australia’s youngest landlord’ after getting her foot on the property ladder at just eight years old.

She and her two older siblings, Angus, 15, and Lucy, 13, bought a four-bedroom home in Clyde, Victoria, two years ago for $671,000. Assuming they hold the home for another ten years, it is estimated to grow in value to $1.8million.

The McLellan family claims the children scraped together money for the deposit by saving up their pocket money instead of buying lollies or toys.

It’s certainly an achievement – but with home ownership comes responsibility for the youngsters, whose overprotective father Cam fears they might one day lose their hard-earned investment in the event of a divorce.

So despite the fact Ruby is only nine and her siblings are teenagers, the 50-year-old father-of-four has made his three youngest sign an agreement to get prenups before getting married or moving in with a partner.

Cam knows that by doing this he is making himself ‘the bad guy’ – but having seen how divorce can deplete a family’s wealth, he wants to make sure a prenup is guaranteed. He says it ‘takes the burden off my kids when it comes to having difficult discussions with their future partner’.

For most couples, a prenup is a choice they make together; but for the McLellan children, it is a legal obligation which, Cam believes, will make things ‘less awkward’.

Cam, who is the the CEO of property investment company OpenCorp, admits some people might view his tactic as ‘too controlling’, but he firmly believes he’s setting his kids up financially. 

The children can’t access any profits from the home to buy designer handbags, a new car or to travel the world. And even if they get married, the money from the property is only for them, not their spouse. The only way for the funds to be released is if it’s being used to buy another property.

If one of his children chooses to marry or co-habit with a partner without a prenup in place, they will no longer be able to profit from the investment home and they will also be excluded from their inheritance. The property is currently held under a family trust which Cam controls and his children are the beneficiaries. 

The four-way agreement states that in order for Ruby, Angus and Lucy to receive any benefits or funds from the trust in future, and if they’re in a relationship or living with someone, they need to sign a prenup with their partner. There are no exceptions.

Cam says he had to convince his ‘old school’ wife Felicity that the agreement was a good decision for their family. 

‘Felicity and I think very differently about prenups. She’s more emotional and doesn’t want to talk about it, whereas I’m a bit more realistic about how a lot of marriages end, so you should plan for the worst case,’ he says.

‘I told her the same thing I told the kids – it’s about making it fair. One failed relationship can negatively impact the other siblings. So we needed a mechanism put in place to ensure they’re protected. 

‘You don’t want to hook up with someone and realise they have $50,000 in credit card debt they haven’t paid off.’

According to the Australian Bureau of Statistics, 30 per cent of marriages in Australia end in divorce. Cam took the statistics seriously when formulating his plan to protect his children if the worst were to occur later in life.

‘I hope it doesn’t happen but, in theory, at least one of my children will break up with their partner based off the statistics,’ he tells me.

The agreement covers ten clauses – asset division, debt allocation, inheritance and family property, spousal support, protection of business interest, estate plans and children from previous marriages, retirement benefits, guidelines for conflict resolution, lifestyle clauses, and full disclosure of assets and liabilities.

The property, spanning more than 200sqm, is positively geared – meaning the rent is higher than the mortgage repayments. This means it doesn’t cost the family ‘anything’ to hold it.

The home needs to be positively geared, Cam explains, because his children don’t make any money to contribute. Negative gearing also isn’t an option for properties held in a trust.

For those considering prenups, Cam says it doesn’t have to be complicated. 

‘You can write a prenup over a couple of pages. It doesn’t have to be a huge template. It simply specifies the assets that were brought to the relationship and how the assets will be allocated should the relationship end,’ he says.

‘It stops things getting nasty down the track. Who knows, one of my kids might hook up with someone who’s incredibly wealthy – it works both ways. It’s about being fair.’ 

The family will keep the property until Lucy and Angus are at least in their early twenties, which will mean they’ve waited one ‘full growth property cycle’ and hope it will reach $1million.

Once sold, the children will receive an equal portion of the profit after tax.

‘Historically, every seven to ten years property doubles in value. I’ve been investing for 30 years and now is a great time to invest based on inflation decreasing and the prediction of interest rate drops,’ Cam says.

Cam hopes that by the time Ruby is 18, all his children will be set up financially. 

The strict father essentially acts like an in-house bank – the agreement states the children need to prove they have financial literacy skills, don’t use ‘buy now, pay later’ services and also don’t have any credit cards.

‘I told each of them I don’t care what job you do or what you get into. You can’t come work for me but I’ll teach you to be the smart investor. This property can’t be touched for at least another ten years,’ he says.

‘I told my oldest daughter, Hannah, who will be 18 in March, it’s worthwhile saving for a deposit for her own home since she’s the oldest.

‘I want to see that they’re all capable of budgeting and saving their money.’ 

In just over two years, the property has increased by $350,000 and the family is considering using that money to purchase another home. 

When it comes to choosing real estate, Cam utilises a three-step guide – find the right market, area and property.

‘Successful investing is a formula – that’s all it comes down to,’ he explains.

‘When I first started it felt like driving a car blindfolded – there was no internet, no information and no one to talk to.’

After buying his first property he put everything he learned into the book ‘My Four Year Old, the Property Investor’ which became a bestseller.

Cam’s advice for  young Aussies is to get into the market as soon as possible, even if you’re renting. He also recommends finding a mentor who has been successful in buying and selling property.