Thumbs up for prenups

It comes as little surprise that August is the most popular month in which to marry, with 15% of all weddings taking place, so now might be a pertinent time to consider the benefits of pre-nuptial agreements.

It comes as little surprise that August is the most popular month in which to marry, with 15% of all weddings taking place, so now might be a pertinent time to consider the benefits of pre-nuptial agreements.

A pre-nuptial agreement is akin to an insurance policy against the financial consequence of divorce, allowing you to retain an element of control in terms of the financial outcome rather than leaving matters to chance.

A pre-nuptial agreement is essential as a tool to protect:

• Pre-marital wealth
• Future inheritance
• Future financial windfall emanating from pre-marital wealth (e.g. sale of a business)
• Family trusts / Third party trusts

Although at present pre-nuptial agreements have no totally settled status in English law, pre-nuptial agreements can be legally very “persuasive” given certain criteria relating to how they arrive at being met and depending on the circumstances prevailing at the time of a divorce and / or separation. 

It is also likely that legislative change will be recommended by The Law Commission, allowing for the legal recognition of pre-nuptial agreements.

If a pre-nuptial agreement is to carry full weight then it is essential certain safeguards are met:

1:         The parties must enter into it of their own free will without undue influence or pressure.

2:         Each party should be separately and independently advised by a solicitor.

3:         Each party should disclose to the other their respective financial circumstances generally. The disclosure should be appended to the agreement.  It is important that the disclosure of full, frank and honest.

4:         It is important that the agreement is entered into some time before marriage takes place – usually at least 6 weeks before the wedding.

5:         The agreement should be fair.  An agreement that is not fair is unlikely to be upheld.  To be fair, recognition will have to be given to changing the agreement as time goes by (i.e.: a review).  What is a fair division after a short marriage will not necessarily be fair after many years of marriage.

6:         If there are, or are likely to be children, adequate provision will need to be made for their housing, maintenance and care.

7:         It is advisable that the agreement contains a review clause at, for example, 5 years.

The divorce court in England & Wales retains absolute discretion when evaluating financial claims arising on divorce. A Judge is required to do what is considered "fair" in line with some statutory considerations. It is not a prescriptive exercise. The assessment of fairness, for all intents and purposes, starts at 50% of capital, and the Court will only stray from the "yardstick" of equality in the exception. The stakes are thus high on divorce when you consider the possibility of a 50% "tax" on your wealth.

The drafting and preparation of a pre-nuptial agreement is a complex and challenging affair. Far too many lawyers use ill-suited precedents which are printed off the word processor and the blank spaces filled in. Cheap is not necessarily cheerful with so much at stake if the pre-nuptial agreement does not hold up in due course to judicial scrutiny!

Harrison Clark Rickerbys' highly experienced family law team is regularly called upon to advise both pre and post relationship. For a free initial discussion please call the team on 01905 612001.