DISPELLING THE MYTHS OF PRE-NUPTIAL AGREEMENTS

Are they just for celebrities?

Not at all. Pre-nuptial agreements are becoming increasing popular and are not just for the very wealthy. With the increase in later-life or second marriages, more people are bringing their own independent wealth to the marriage and are seeking to protect that wealth for their own needs and also for their children.

Why get a Pre-Nuptial Agreement?

Upon entering into a marriage, it is the obvious intention of both parties that the marriage will endure for the rest of their joint lives.

In the unhappy event that those wishes are not fulfilled, a pre-nuptial agreement records what was agreed by both parties at the outset of their marriage.  It can avoid costly, time-consuming  litigation.

 

What are the advantages of entering into a Pre-Nuptial Agreement?

Certainty

You can agree in advance which assets are to be shared and which assets are to be ring-fenced from the matrimonial finances.

Transparency

When drafting the agreement, both parties are required to exchange their financial disclosure. This means that you both know at the outset the approximate value of each other’s assets.

Cost effectiveness

The cost of drafting a pre-nuptial agreement is likely to be far less than the costs of litigation, should the marriage breakdown and the division of the matrimonial finances be disputed.

Flexibility

You and your partner have control of what is included within the agreement and can agree how your individual funds are to be protected. The agreement can be updated over time, taking into consideration changing circumstances.

Protection of existing or inherited wealth

When entering into a marriage, perhaps for the second time, you may well assume that the property that you bring to the marriage will remain yours. Under the matrimonial law in England and Wales, the family home is presumed to be a matrimonial asset, to be shared between the parties. This can result in a former family home being sold and the sale proceeds being divided between the parties.  The children from a previous relationship would no longer benefit from the full share of that property.

 

Protecting the family business

If one party’s needs cannot be met through the existing joint matrimonial finances, any other assets owned, including shares held in a family business can be utilised by the court to meet those needs. When drafting a pre-nuptial agreement, all eventualities are considered and the agreement sets out to protect both parties’ individual assets from being diverted.

 

Are Pre-Nuptial Agreements binding?

The Court is likely to uphold a pre-nuptial agreement if the following conditions are met.   The parties must have entered into the agreement freely.  They must each have taken independent legal advice.  They must have full knowledge of the financial assets.  And they must both have full understanding of the implications of the agreement.  The court will not uphold an agreement if it would be unfair at the time of the divorce.

If the correct procedure has been followed and if neither party will be left with their reasonable needs unmet, current case law provides that a pre-nuptial agreement will be upheld.

 

Am I too late to enter into a Pre-Nuptial Agreement?

If you are already married or the wedding is imminent, you are likely to be too late for a pre-nuptial agreement. However, a post-nuptial agreement can be entered into after the marriage has taken place, provided that it is not in contemplation of a separation.

At Chubb Bulleid we are committed to helping our clients plan for their futures and to protect themselves from as many of life’s obstacles along the way.  We encourage our clients to view a pre-nuptial agreement as any other insurance policy.   You do not purchase a house with an expectation that it will burn down, but you would always insure your house against that risk.

 

For more advice on the benefits of a pre-nuptial or post-nuptial agreement, please contact family@chubb-bulleid.co.uk and we would be delighted to assist you.

 

Article by Tracey Cook

8 March 2024