Pre-nuptial agreements - not just for the rich and famous
With the wedding season almost upon us, couples are often considering whether to enter into a Pre-Nuptial Agreement. Julian McCarthy, Senior Family Solicitor provides an informative guide to engaged couples wishing to protect their assets prior to getting married.
What exactly is a Pre-Nuptial Agreement?
A Pre-Nuptial Agreement may not be the most romantic, but it clearly sets out how a couple’s assets and income is divided in the event of a divorce. The alternative is allowing the Family Court to exercise its full discretion in determining how the parties’ wealth should be divided, including assets, pensions and income. This could include wealth inherited by past generations, income from a business that you have built outside of the relationship or properties both in the UK and overseas.
It should also be noted that a Pre-nuptial Agreement can contain provisions in relation to privacy. Therefore, if one of the parties has significant wealth or is of press interest, then the Agreement will help keep the couple’s affairs private.
Is it worth having a Pre-Nuptial Agreement?
The short answer is, yes. Whilst a Pre-Nuptial Agreement is not binding upon a Judge in England and Wales, previous cases surrounding Pre-Nuptial Agreements confirms that those that are entered into freely and with full understanding of the implications should be upheld - unless it would not be fair to hold the parties to such an Agreement. Therefore, provided certain safeguards and needs are addressed, the Court may hold the parties to the terms of the Agreement.
What are the benefits of having an Agreement in place?
An Agreement provides certainty in terms of evidence of the parties’ intentions at the time of marriage, and reduces the need for costly litigation. If one of the couple has generated significant assets before the marriage the Agreement can be used to ring-fence and protect them. Furthermore, a person who is earning very highly may wish to try and cap any maintenance provision made to the other party in the event of a divorce.
What should an Agreement contain?
Agreements are bespoke and tailored to the parties’ individual circumstances. They can deal with the division of assets and income, or deal only with assets, and leave income to be dealt with at the time of divorce.
It is always worth having a review clause in a Pre-Nuptial Agreement in case parties’ circumstances change such as children are born or there are times of unemployment or a significant change of financial circumstance.
What is the cost of an Agreement?
Costs can range depending upon the individual circumstances and how much time has to be taken to prepare the Agreement. The earlier you discuss the matter, the better. It is better not to leave it to the last moment as Law Commission guidance states that Pre-Nuptial Agreements should be signed off two months before the marriage.