Harriet Reid, Partner
Pre-nups – the perfect wedding gift to protect farming families?
Early summer, with its promise of long sunny days and blue skies, is understandably one of the most popular times of the year for couples to marry.
Planning for the big day will have taken many months as venues, caterers and guest lists have been considered and finalised – and the average final bill is likely to be around £30,000.
Along with the dress, cake, flowers and photographer, I would urge engaged couples to invest in one important extra – a pre-nuptial agreement. It may even be the best wedding gift a parent or relative can give, particularly if they are considering passing on assets or an interest in a farming business and wish for it to remain in the family.
Anyone entering into a marriage knows that there is a risk it may end in divorce. It may seem unromantic but having an open and considered discussion before tying the knot may prevent additional heartbreak in the future should things not work out as hoped.
A pre-nuptial agreement – or pre-nup – is a legal arrangement made between two people before their marriage. It will usually set out how the couple wish their assets to be divided between them if they later separate or divorce. Some agreements also detail how the couple will arrange their finances during the marriage.
As part of their overall tax and inheritance planning, parents are often advised to transfer assets to the next generation in an effort to reduce their exposure to inheritance tax. Although this advice may well be sound, parents are often reluctant to actually make the transfer in case the younger couple’s marriage ends. They fear that assets that have built up over very many years, or which may have been handed down through the generations, will be divided up and lost from the family.
A pre-nuptial agreement will provide clarity, certainty and protection, preserving family wealth, and helping in the overall tax planning for farming and other business families.
Such an arrangement gives parents peace of mind, by allowing them to make gifts, confident in the knowledge that they will remain in the family, even if the newly weds separate in years to come.
For the younger generation, these agreements should be seen as a “no brainer”. Arguments about money are a major cause of bitterness, anxiety and cost arising from the breakdown of many marriages. A well thought out pre-nuptial agreement dealing with finances, housing and other assets may help to prevent this.
Although a pre-nup cannot override a court’s discretion to decide how to distribute assets on divorce, a properly prepared agreement, entered into by both parties of their own free will, is likely to be considered favourably by a judge in the event that a couple divorce. A robust agreement should contain full information relating to the assets involved, their value and an understanding of the effect of the agreement in order to withstand scrutiny in a divorce court.
Crucially, the pre-nuptial agreement must be freely entered into. Each person must have a full appreciation of the implications of its terms and it must be deemed fair to hold them to their agreement. I would advise engaged couples to agree a pre-nuptial arrangement well in advance of their wedding – at least 21 days beforehand. A divorce court may feel that a pre-nup drawn up close to the wedding day, smacks of unseemly haste and possibly coercion.
A well drawn-up pre-nuptial agreement, backed by sound legal advice, can form an important part of asset protection for farming families seeking to regulate their own affairs and protect land and assets for future generations.
This blog first appeared as our column in the Yorkshire Post’s Country Week.
If you have any questions about nuptial agreements of any aspect of family law, you can email Harriet at firstname.lastname@example.org or phone her on 01748 900 694. You can follow Silk on Twitter @silkfamilylaw