By Julian Nelson, Director & Head of Family Law
Pre-ups used to be associated mainly with the rich and famous, but they’re now being used by couples from all walks of life.
They are particularly popular with people entering second marriages who want to safeguard their assets for their children from a previous relationship. People who have inherited money or perhaps been awarded compensation for an injury or employment claim are also using pre-nups to protect their interests.
Here are some points to consider when drawing up a pre-nup agreement.
What is a pre-nup agreement?
A pre-nup, sometimes referred to by more formal names such as pre-nuptial agreement or pre-marital agreement, is a legal document setting out what should happen to a couple’s assets if their marriage breaks down and they separate.
Why do I need one?
In the excitement of getting married it’s easy to forget that many relationships don’t work out and end in divorce.
If that happens, people’s emotions can run very high, making it difficult to deal with practical matters such as how assets should be divided. A pre-nup agreement that already covers these issues can make the divorce run more smoothly and prevent a lot of stress and heartache.
What areas should the pre-nup cover?
This will depend on your individual circumstances. For example:
- in divorce proceedings, money and property are often split on a 50-50 basis. This can work well but you may have assets that you want to retain or that would be difficult to share. If that’s the case, it may be possible to exclude them from a future divorce settlement, although it may mean having to make sacrifices in other areas.
- you may have an inheritance that you want to protect.
- you may have children from a previous relationship and want to ensure that their inheritance is protected.
- you may be entering the marriage with far more assets than your partner. If so, you may wish to ensure that it is protected from the general principle of sharing everything 50-50
Could a pre-nup be used to protect my business interests?
Pre-nups are increasingly being used in this way. In fact, many firms now require directors to ensure that their partner won’t be able to gain a share in the business in the event of a divorce as that could prove disruptive.
What if my future partner has a lot of debt?
A clause can be inserted into a pre-nup to protect you from being liable for such debts.
Are pre-nups legally binding?
Pre-nups are not automatically binding in all circumstances in the UK but the courts increasingly uphold them as long as they are properly drawn up with the help of a solicitor.
The landmark case involving Karen Radmacher helped to secure the legal status of pre-nups.
Ms Radmacher was the heiress to a paper company worth hundreds of millions of pounds. Her husband was Nicolas Granatino, a French former investment banker.
They had a pre-nup but Mr Granatino claimed it was unfair because he had been unaware of the extent of his former wife’s wealth. However, the Supreme Court ruled against him and said the pre-nup should stand. Court President Lord Phillips said that English courts should follow the precedent set by the Supreme Court.
The courts now only overturn a pre-nup if it is deemed unfair.
What else do I need to know?
Both you and your partner must declare all your assets at the outset.
The pre-nup must be drawn up properly to be effective. If the courts believe that one partner was coerced into signing it then it may not be upheld.
Both husband and wife need to use different solicitors to avoid any conflict of interest. Both solicitors must confirm that the agreement was entered into freely and both sides understood what they were signing.
The pre-nup should be drawn up at least 21 days before the marriage. If the courts suspect one partner was pressured into signing at the last minute, the agreement may not be upheld.
Isn’t it all a bit cold and unromantic?
The idea that pre-nups are unromantic is fading fast. With so many marriages failing these days, people just don’t want to take any risks.
And most couples who make such arrangements say it strengthens their relationship to know that they have been able to discuss and agree on important issues that could affect their future.
For more information about this article or if you have any queries or concerns relating to family law, please contact one of our team on 01228 516666.