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Are Pre-Nups just for the rich and famous? I have assets I want to protect too!

Are Pre-Nups just for the rich and famous? I have assets I want to protect too!

A pre or post nuptial agreement is a formal agreement entered into by two parties who wish to protect their assets in case their marriage ever breaks down.

Pre-Nuptial Agreements in particular are assumed to be a mechanism for the rich and famous to protect the assets Although this is sometimes the case, this is not the only purpose of such agreements. More and more people are entering into pre/post nuptial agreements, which, perhaps, demonstrates the shifting attitudes towards such agreements and their place in modern married life.

With 42% of marriages ending in divorce (Office of National Statistics 2019), it is no surprise to see an upward trend of pre/post nuptial agreements. Money and communication are some of the main causes of conflict in a marriage and if the relationship breaks down, that conflict can become heightened.

It can therefore be hugely beneficial for couples to sit down and agree on important financial matters before the relationship breaks down as it could avoid lengthy and costly legal battles later on!

There are many reasons why pre/post nuptial agreements should be considered, such as:-

  1. You have substantial wealth and assets that you wish to protect from future divorce;
  2. If one or both parties have been married previously they want to protect certain assets from a future divorce
  3. To protect assets for children from previous relationships in the event of death;
  4. To protect of valuable family assets from a future divorce;
  5. If you run a business and want to ensure its future is protected from a future divorce.

Whilst marital agreements are legally binding in many jurisdictions across the world, they are not legally binding in the jurisdiction of England and Wales at this time.

However, following the landmark case of Radmacher v Granatino the law in England and Wales developed significantly. In the Judgement, the Supreme Court said:

“the Court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.

Simply, for a court to give effect to pre-nuptial agreements, it must be satisfied that the three main criteria have been met:-

  1. It must be freely entered into by each party;
  2. Each party must have had a full appreciation of its implications; and finally
  3. It must not be unfair to hold the parties to the agreement made.

A pre/post nuptial agreement is more likely to be given weight by the court a) where parties have exchanged financial disclosure, b) have both received independent legal advice or at least the opportunity to have done so, c) where there has been no undue pressure or duress to coerce either party to sign the document and, d) in the case of pre-nuptial agreements, where the agreement is signed well in advance of the marriage / civil partnership.

It is important to note that a pre/post nuptial agreement cannot override the Judge’s power to decide on the appropriate division of assets on divorce. The Court still retains full discretion to follow or depart from the terms of the agreement.  This means that a pre/post nuptial agreement cannot stop a spouse from applying to the court for financial provision from the other spouse. The pre-nuptial agreement will be considered by the court as a relevant circumstance of the case, but that does not automatically make the existence of the pre/post nuptial agreement the deciding factor.

This was demonstrated in the more recent case of Brack v Brack [2018]. In this case, the parties entered a pre-nuptial agreement. There were assets of around £11,000,000 and the husband was a racing driver and the wife a home maker. The parties had 2 children. The case went all the way to the Court of Appeal. Lady Justice King gave the lead judgment and said that “even where there is an effective pre-nuptial agreement, the court remains under an obligation to take into account all the factors found in Section 25(2) of the Matrimonial Causes Act 1973, together with a proper consideration of all the circumstances, the first consideration being the welfare of any children”.

The reasons for marital agreements are wide and varied and if you think that such an agreement might be appropriate to you, please do not hesitate to contact the family department at Clifton Ingram who can guide you through the advantages and disadvantages of entering into such agreements.

This article is written as a general guide and believed correct at the date of publication.  If you need further or more specific information relating to your situation, please get in touch with us.

AUTHORS - Danielle Bentley and Joanne Backwith.

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