Nuptial Agreements And Asset Protection
“A practice with a ‘national reputation’, the boutique Silk Family Law advises on all areas of family law, regularly handling complex family issues with an international aspect. The practice includes financial matters, pre-and post-nuptial agreements and various children’s issues ranging from residence and contact to abduction.”
If you and your partner enter into a pre-or post-nuptial agreement, you can determine in advance how your assets will be shared should you separate or subsequently divorce.
Making those decisions before you marry, or enter into a civil partnership, will reduce the financial and emotional trauma of divorce - should it ever happen.
This should enable you both to move on more quickly and, importantly, ensure any children are provided for.
Pre-nuptial agreements are particularly pertinent for landowners, farming families, business owners and anyone bringing pre-acquired assets to a marriage. Couples who are marrying for a second or subsequent time find them useful to help ensure that any children from a previous marriage may be protected.
Post-nuptial agreements are similar arrangements drawn up after a couple has married.
Although pre-nuptial agreements do not remove the jurisdiction of the court, a Supreme Court decision in 2010 has given pre-nuptial agreements far more weight in law. In February 2014 the Law Commission recommended that pre-nuptial agreements should be legally binding in divorce settlements once the needs of the separating couple and any children have been taken into account.
Who and what are Pre Nuptial Agreements for?
In the video below, Silk Family Law associate Matthew Miles explains how pre nups work and who they are suitable for.
Should you enter into a Pre-Nuptial Agreement?
This very much depends on your personal circumstances. A pre nup records how you and your future spouse will divide assets if you permanently separate or divorce in the future. For example, it can detail what would happen with the family home, business interests and other assets and address other issues such as whether maintenance would be payable. It can help to put important issues to rest before you walk down the aisle. In most cases, both parties would want the same thing, that is to be treated fairly and walk away from the marriage with an appropriate financial settlement. It is therefore important for both parties to be open and honest about what they want in the agreement.
Are Pre Nuptial Agreements legally binding in the UK?
The short answer is no. This is because the family court retains overall discretion over how to divide assets and income on a divorce, such as where there are children involved. There have, however, been a number of high profile cases over recent years in which courts are demonstrating an increased readiness to uphold the terms of existing nuptial agreements.
There are four factors which should be satisfied for that to be the strongest chance of a Nuptial Agreement being upheld:
- The pre nup should be signed well in advance of the wedding date. The minimum period of 28 days prior is recommended to ensure there’s a cooling off period, thereby minimising any suggestion that either party is put under duress or pressure to sign the agreement.
- Both parties are expected to receive independent legal advice on the terms of the agreement before signing it, to ensure that everybody enters into the agreement with a full understanding of the implications of doing so.
- There should be full disclosure of each other’s financial circumstances, and that usually takes the form of the schedule, which is attached to the agreement itself. This is to provide transparency so everybody has a clear understanding of each and finances are entered into the freedom.
- The court’s willingness to uphold the pre nup will be greater if its terms are seen to be “fair”. The issue of fairness primarily relates to a person’s reasonable needs. So in answering the question ‘would it be fair to hold both parties to the financial settlement outlining the agreement?’ the court will assess whether doing so will prevent one parties needs being met, or place that party or any dependent children in financial hardship.
How long does a Pre-Nuptial Agreement last?
Typically a pre nup is expected to last the lifetime of the marriage, but in many cases there will be provision in the agreement stipulating a periodic review of the terms upon certain events occurring, such as the birth or adoption of a child or the marriage lasting a certain length of time. In other cases, there may be a termination clause after a fixed period. The terms of a pre nup are always tailored to a couple’s particular requirements.
Who pays for a Pre-Nuptial Agreement?
Normally the person who has the greater assets or higher income wishes to put a pre nup in place for their protection and they will pay for the agreement to be drafted. However, the other party will still need to obtain their own independent legal advice to review the pre nup, assess whether the financial disclosure is accurate and whether the terms of the agreement are fair. Some couples are happy to pay for their own legal advice, but it is common for the financially stronger party to meet all of the legal fees, subject to those costs being agreed in advance.
Do you need a Lawyer to draft a Pre-Nuptial Agreement?
Pre nups can be complex and technical documents. It is a potentially binding and life changing agreement that should not be prepared without proper legal advice. It is common for the Family Courts to scrutinise pre nups closely. There is a strong likelihood of the pre nup being invalidated by the Court if it is not drafted properly, or a party has not received a professional opinion as to the fairness and appropriateness of the agreement and its effects and implications.
How long before a wedding should a Pre-Nuptial Agreement be signed?
A pre nup should be signed at least 28 days before the marriage, but it is good practice to prepare and sign the agreement well in advance of this. The sooner you start discussions the better, ideally several months before your wedding date so it can be completed and put to bed without time pressures, otherwise it can cause unnecessary stress, distraction and upset in the lead up to the celebrations.
I’m already married – can I still obtain a Pre Nuptial Agreement?
It is possible for couples who are already married to enter into a Post Nuptial Agreement (or “post nup”), which is a similar legal agreement. Quite often, a Post Nuptial Agreement will be put in place in cases where Pre Nuptial Agreement is entered into relatively close to the wedding date, to reinforce and mirror the terms of that agreement.
How much does a Pre Nuptial Agreement cost?
The cost for a pre nup varies quite considerably as it is dependent both on the complexity of the terms and the level of negotiation required. Costs are higher where there are substantial assets involved and a much more detailed investigation of the finances is required, often involving other advisors such as accountants, financial wealth managers or pension specialists. At the other end of the scale for relatively straightforward pre nups, the cost is often in the range of £1500 to £2000 pounds.
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