Pre-Nups - Not Just for the Rich and Famous
Nowadays, especially those who intend to marry for the second time, will already have children and assets, often a home where they are living, that was acquired prior to the new relationship. Most parents in that situation want to ‘protect their children’s inheritance’ and it is understandably a case of ‘once bitten, twice shy’.
Unlike other countries, a pre-nuptial agreement is not binding in a UK court of law at present upon divorce. However, it is binding on the parties and has always been a very relevant factor taken into account by the Court when deciding on a financial settlement.
This position was confirmed in a landmark decision 15 years ago. A very wealthy German wife, Katrina Radmacher, whose wealth was estimated to be around £100m, successfully appealed at the Court of Appeal, against a decision that provided her husband with £5.6m, rather than the £1m agreed in the pre-nup. The husband appealed to the Supreme Court who rejected his appeal. This set a strong precedent confirming that it should be recognised that parties entering into a properly drawn up agreement should be held to the terms, unless there are relevant circumstances that it would not be fair to hold the parties to their agreement. With the onus being on the party arguing against it as to why they should not be held to the agreement.
In a recent case, after a marriage lasting less than a year, where there was a pre-nup essentially saying both of them should walk away from the marriage with whatever they brought into it, the wife sought to have her full financial position considered. The husband made a cross application seeking to hold her to the terms of the agreement. The Judge agreed and said that it’s terms were of such “magnetic importance” it assumed greater significance than all the other factors the Court had to consider and was determinative of the position.
Such an agreement should be entered into well in advance of the wedding, without pressure being placed on either party – so not a ‘shotgun’ wedding, with both parties providing full disclosure of their income and assets, with both parties having legal advice and with the outcome not being unfair on either party or their children.
A post-nuptial agreement can also be entered into, so it is never too late to put one in place.
A pet-nup is also possible, to ensure any agreement as to what is to happen on separation to our furry friends is recorded.
Further, it is not only people marrying who should worry about their wealth, property, or inheritance, but also those about to live with a partner. For cohabiting partners, the equivalent of a pre-nup agreement is a living together or cohabitation agreement which is legally binding on them. These agreements are not just about what will happen to any home or furniture if they separate, but also can include who is going to pay what proportion of the bills.
This may seem unromantic, but it can alleviate any concerns from the start and allow both parties to concentrate on their relationship. It can even be a romantic gesture. I once drafted a pre-nup for a lovely couple where the husband-to-be insisted his wealthy wife-to-be entered into one, to prove he was not ‘after her money’. That’s better than a dozen red roses.
We offer a discounted first meeting to discuss any family matter, including pre-nups, divorce, finances, children, and domestic violence. Contact Michelle Ellis by calling 01449 613 101 or email michelle@gudgeons-prentice.co.uk.