It is Thursday. Leo, 60, diamond merchant, rich and seething, drives to the upmarket Sydney suburb of Double Bay for the mail. He has delivered an ultimatum to his fiancee. Unless she signs the pre-nuptial agreement, their wedding on Saturday is off. Naomi, 55, blonde, on the brink of a brilliant marriage, is flabbergasted. Has she overplayed her hand?

This is not a television drama. It is a real-life pre-marital spat where the stakes are high. Back home in Vaucluse, Leo asks Naomi if she has decided. She says no. She wants more than a "couple of million dollars"; she wants a slice of Leo's business, too. Leo is adamant. He was scorched by a previous marriage and won't have his business dragged through the Family Court. With Saturday's wedding paid up-front, entertainment and celebrant booked, guests flying in from interstate, he won't be swayed.

He tells Naomi: "I love you to death but unless you sign it's off." Naomi stands her ground. "OK," says Leo, "start ringing the guests." "No," says Naomi, "you start." And bang, bang, bang, he does.

So is love over for Leo? He laughs. "One door closes, another opens. Look at it this way: I'm back on the market." Will he do another pre-nup? "Absolutely. What's mine is mine, what's hers is hers. But I won't have my $4 million business involved with the family law courts again. I'll keep it out."

Just what is this fancy term, the pre-nup, that gives family planning a whole new meaning?

It is a binding financial agreement between people before they marry to insure against one partner exploiting the other if they break up (and 43 per cent do). It is not for the sensitive "how dare you ask me to sign this when you said you loved me" school. It is for level-headed couples or those with unequal assets, determined not to get embroiled in the legal costs and emotional stress that family courts entail.

For Hollywood, it is a way of life. In Australia, where the pre-nup became legally binding last December, the idea is still in its infancy. So far, the users are those marrying for a second time rather than first-timers not yet burnt by love. But de facto and gay couples also use it: they sign cohabitation agreements governed by state law. (That's the Property Relationships Act in New South Wales and the Property Law Act in Victoria.)

Garry Watts, chairman of family law at the Law Council of Australia and partner at Watts McCray, says the pre-nup "is here to stay. But capital gains tax relief must still be granted and lawyers' certificates re-worded to give marriage, not financial, advice." His pre-nups cost from $500 to $1500.

Nigel Nicholls, partner at Stuart Fowler and Partners, gives the pre-nup a thumbs up and down. "They're good for second marriages with difficulties behind them," he says, "but, for first marriages with a future ahead, they are dangerous." His price tag is $2000 to $6000.

Already variations have evolved: the mid-nup (as in Jodee Rich signing over his assets to his wife Maxine during the One.Tel debacle) and the post-nup after couples split.

In theory, the idea is a practical innovation for a divorce-riddled world. Duncan Holmes, partner in family law specialists Slade Manwaring, says: "People can now plan for a financially worry-free future".

In reality, though, the pre-nup in all its forms (financial, cohabitation, property, termination) is far from plain sailing. People are confused about what it entails. To some it highlights the bargaining power of those who want to enter into marriage. Others may agree to things that in hindsight they wish they had not.

Take Lewis, 51, an inner-city financier. Five years ago he had a messy court divorce, running up $25,000 in legal bills as well as valuation fees for his wife's jewellery, his silver mugs, the cars, superannuation/ bank/credit card statements. He settled 57/43 per cent in her favour.

Then ("once bitten twice shy") he entered into a de facto relationship with Anne, 49. They bought a house and Lewis thought the pre-nup was a good idea. "She was a lovely lady, brought three children to the relationship, none of whom helped around the home," he says. It was a simple cohabitation pre-nup relating just to the house. Lewis (income rich and asset poor) put in more money than Anne (asset rich and income poor). But then Lewis added a clause: Formal notice of one month and then either sell or buy the other out.

"She became very emotional and said, 'I've lived in my own house, I will never be given a month's notice'," he says. And the upshot was "we had huge rows like I've never experienced in my life, so we agreed to sell. The final taunt was, 'Give me the notice as per the agreement,' so I did." (When they broke up he e-mailed friends in England and one zipped back: "Sorry you've moved. Knew it would be those kids.")

Would Lewis do another pre-nup? "Bloody oath, no! I'll just dust this one off." Then he changes his mind. "Perhaps I'd make that two months' notice." After all, this one saved legal costs and Lewis feels vindicated. They split: 57 per cent him, 43 per cent her, the same ratio as his first divorce.

Colin, 51, a Woollahra millionaire, enjoyed 30 years of married bliss to Irene, 52, with more than $12 million in assets - a factory and five houses ("we had the boat, tennis courts, full-time gardener, swimming pool cleaners, BMWs for the children"). It ended because Colin stopped work and sold the company. He wanted to be a "normal guy and do things normal people do".

When Irene divorced him, she wanted "60 per cent of my assets, about $10 million". He took her to court and fought. Three turbulent years later, within one day of agreement and with millions of dollars organised, Irene made another claim. "She wants my washing machine, my tumble dryer and my dining room suite, and I said, 'For God's sake, she's got her own, she's not having them'." Next day she relented and it was over. Irene received $3 million, Colin $5 million.

What would he do next time? "There'd definitely be a pre-nup: What I had before I keep; whatever we make together, 50-50. But look, I don't care about property, though I'd be upset without my Mercedes. They say men are from Mars, women from Venus. I reckon divorced women are from Pluto."

Possessions, possessions. What's the point when love turns sour? Yet there are women who still twitch years after at the sight of their goodies in the hands of the replacement wife.

Jennifer, 33, a media consultant from Point Piper, says: "It just kills me this woman is drinking wine from my crystal glasses and eating with my silverware." She walked away from 13 years of monogamous de facto love and organic cooking with just her clothes. "I didn't even get the sentimental things, the picture frames. I left everything because I thought the break was temporary but I was wrong."

She thinks the de facto law is unfair. "I was jerked around by a guy for 13 years and ended with a pittance. My lawyer said, if I'd married, I'd get half. I got one tenth." But life goes on and Jennifer has a new chap. Yet still she refuses to put a de facto agreement into place.

"We are financially equal and money isn't an issue in this relationship," she says.

That sort of thinking isn't typical but neither are Jennifer's circumstances. Often, partners bring unequal assets to a relationship. They also covet different things when they break up. Men care more about a way of life than property: freedom to do "their thing", provided they have their car, their men friends and bags of cash. Women care about cherished possessions: coffee cups, artwork, crystal glass, silverware and houses. They remember in detail what has gone into the organic meals cooked, not the men who ate them. The high life is missed not because the husband scrammed but for the goodies lost forever.

Yet, for some, the big principles are all that matter. Alice, 41, married for 18 years to a pilot, has this advice for ditched women: "Be tough, go for property settlement and child maintenance first, worry about divorce after." Her split with Dean, 45 "when he decided flight attendants were more fun than his family" came in Dubai where they lived in lavish style.

Back in Australia, she went softly softly to mediation and won maintenance. Then he reneged ("and him earning $150,000 tax-free") and demanded a divorce. Alice took him to court and won the house and maintenance for their daughter.

If she remarried she would definitely have a pre-nup. "First, I'd keep my home, combined income we'd share, what's his he'd keep."

In Victoria, married couples can take advantage of the newly legally binding pre-nups. When couples marry anywhere in Australia, they are bound by the federal Family Law Act.

But in Victoria, de-facto couples and same-sex couples - without the piece of paper saying they are married - are still bound by old state laws, under either common law or the Property Law Act.

What this means, says the chairman of the family law section at the Law Institute of Victoria, Bill Kordos, is that de-facto couples and gay couples in Victoria are discriminated against compared with married couples.

Unlike married couples, de factos and gays are not recognised in family law by the State Government, and they miss out on the advantages offered by the federal 2000 pre-nup amendment.

For example, where the federal Family Law Act takes into account children and maintenance payments, the state laws do not.

New South Wales, South Australian and Western Australian state governments have ratified legal agreements between de-facto couples. However, Mr Kordos says, the term pre-nuptial is outdated. Pre-nups are out. Now its a "financial agreement".

Except for the lawyers, the names of people interviewed for this article have been changed.

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