Pre-nuptial agreements – playing a role in protecting wealth
Have you ever thought about what would happen to your wealth if you were to marry, and then get divorced?
Perhaps you have already built up a successful business or received inheritance that you want to protect from division in the event of a divorce. Under the present law, you could lose half, or more, of your assets to your “ex”, but you can take steps to reduce the chances of this happening by entering into a pre-nuptial agreement.
A pre-nuptial agreement will set out who will get what in the event of a divorce. For many years, prenuptial agreements have not been binding in the courts in England and Wales. However, this is changing following a couple of cases that came before the courts recently.
In 2007, the Court of Appeal, in the case of Crossley v Crossley, upheld a pre-nuptial agreement, where the fact that the parties had clearly set out their agreement as to what would happen was held to be a very important factor in the court’s decision.
More recently in July 2008, in the case of NG v KR , whilst the court was critical of the agreement, it decided that it would not be right to ignore the agreement completely, given that the husband was a man of commerce and aware of the effect of the contract.
A pre-nuptial agreement should be discussed at an early stage before the wedding; the day before is too late – and at least 21 days would be seen as a sensible gap.
Before entering into the agreement, both parties will need to disclose their assets fully, and have independent legal advice. The parties need to set out, not only that they want to enter into an agreement, but why; for example protecting an inheritance or business interests or to cover the future needs of adult children. It is important that every foreseen eventuality is covered; otherwise it is very easy to set the agreement aside and for one party to ask the court to disregard it.
The chances of the pre-nuptial agreement being effective are improved where:
- There is no disparity of bargaining power. If this is unavoidable, there must be no exploitation or pressure on one party.
- Each person intends that the agreement will be legally binding.
- There are clear reasons for the agreement and why it is regarded as fair.
- There is a definition of property that is considered ‘non-matrimonial’.
- There is provision for regular reviews, particularly following the birth of children.
The agreement will be viewed by the courts as an important indication as to what was in the parties’ minds when they married, which is likely to influence their decision. The more detailed the agreement is, the more weight the court will place on it and if they are properly set out, they are more likely to be held binding upon the parties.
An experienced family lawyer needs to be involved at an early stage to advise you and draw up an agreement.
To find out more and to see whether this is a solution for you, call our family department today on 01785 211411 or 01889 583871.
2 December 2008
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances. (50587)