In this blog, Family Law in Partnership director James Pirrie considers the pros and cons of pre-nups (or pre-nuptial agreements).
Ahead of marriages, I have negotiated dozens of pre-nups for those wanting to protect wealth and those worried at being excluded from it. “Pre-Nups” are often negotiated at times of stress, often shortly before the wedding takes place, and therefore this can be a very off-putting process.
Talking about money before marriage can cause last minute fears:
- On one side that they are marrying a gold-digger; and
- On the other that their fiancé late in the day seems to be wanting all the benefit of marriage without making any of the expected (hitherto surely promised) commitments.
These fears may happen because the difficult topic of money may not have surfaced but actually it is often best to discuss financial affairs prior to marriage in order to negate any difficult conversations further down the line. An easier way to view these fears might be to:
- Remember that you are not buying insurance against the heart-ache of separation;
- Assess more carefully what you are trying to achieve;
- Start earlier with the process; but
- Think about what sort of practical preparation is needed.
If you have worries about what ifs and buts are in the future, why not plan for them and wrap up any agreements in a deed which is more likely to be considered by a court as legally binding than ever before, provided specific requirements are met. These are broadly:
- independent legal advice is taken by each person entering into the pre-nuptial agreement;
- the pre-nuptial agreement is signed at least 28 days before the date of the marriage;
- full and frank financial disclosure has been exchanged between the couple;
- the couple understand the implications of signing the pre-nuptial agreement and what he/she may be giving up;
- there being no undue pressure on either person to sign the pre-nuptial agreement; and
- the pre-nuptial agreement meets the basic financial needs of the less wealthy party.
What else needs to be thought about?
You might hold in mind that the court has a pretty decent and flexible mind-set and that it strives for a fair outcome in the event of divorce/separation and that a court:
- Recognises what has been built up before the marriage by each of you;
- Aims to leave separate what each of you might inherit or be given during;
- Expects to divide up – broadly equally – what you build up together by the marriage; but
- Seeks to enable each side to meet their needs, recognising:
- An aspiration for financial independence if achievable; and
- Factoring in an appreciation of the duration of the marriage. [So don’t go expecting life-long maintenance if you have only been together for 18 months]. (And yes this may mean that those separate pre-marital etc resources are needed for this).
Pre-nuptial agreements can provide certainty about the division of finances in the event of a divorce and can try and cover each of the points listed above. That being said, the English courts do retain the power to override a pre-nuptial agreement if the financial needs of one party are not met. This aspect is often the source of frustration for clients, who want that certainty. The best way to ensure that your pre-nuptial agreement is upheld by a court is to provide a financial safety net for the financially weaker party. In that sense, it is possible to consider a pre-nuptial agreement as a way of mitigating (or lessening the impact of) the financial claims of one spouse against the other. When properly prepared these agreements will shape what happens if, at a later stage, you and your partner separate and divorce. In the meantime, they can bring clarity and support to your relationship and can provide the added benefit of peace of mind should either of you, at a later date, need legal protection.
A question that I often get asked is:
“Why guess what situation you will need to be dealing with, rather than wait and see what it actually is?”
One of the quirks of pre-nup negotiation is trying to come up with a formula that will provide for all possible situations in which the couple will find themselves. Alternatively the financially weaker party might be faced with a “non-negotiable” document that provides the same whether the parties separate in 6 months’ time or in fifty years after a half-football team of children have arrived and flown the nest.
If you’re going to get a pre-nup….
My final thought will sound self-serving but it is honestly held: if you are going to do this business, make sure that you are in the hands of someone who is viscerally focused on getting you both through it in a positive way. There lies the best chance that you will not descend into the sort of fears that risk swamping the joy of what you are about to embark on together.
For further information….
Take a look at my top tips to help you ensure you go about a pre-nuptial agreement in the right way.
For more information regarding the division of assets on divorce and the impact of pre and post nuptial agreements, please contact James Pirrie, or any of the specialist family and divorce lawyers at Family Law in Partnership on T: 020 7420 5000 or E: email@example.com.