The way society views marriage is changing, the marriage rate has been in slow decline, couples are marrying later and are more concerned about what might happen if they divorce. The latest figures suggest that 42% of all marriages end in divorce. This may be the reason for the increase in instructions for solicitors to prepared pre-nuptial agreements. Let's face it, pre-nuptial agreements are unromantic, when one goes down on one knee asking that special person to spend their lives together, it's rarely followed by a BUT! But, how do you protect pre-marital assets? What about those family gifts of a house deposit from the bank of mum and dad? Protecting inheritance for children from a previous marriage? Hard earned investments or the family business that is intended to be passed down the family from generation to generation, which you wish to protect from being sold off as part of the marital settlement. How can you protect your past achievements or family wealth, from a possible future breakdown of your marriage. Long gone are the presumptions of a life-long marriage, it is something we all aspire to, but the statistics weigh heavily against our favour. I know how hard it is for clients to start the discussion with their partner about protecting their assets. The concern is too fold, how do I support and protect what I have? How can I achieve this without damaging the relationship I have with the person I want to marry? However, surely honesty and integrity are the foundations of any marriage? We should not forget that marriage is a contract, for better for worse, for richer, for poorer, those vows are centuries old, for some they follow true, a life-long happy marriage, while for others, regret of if only they had considered what might be the outcome. If honesty should be the founding principle when entering into a new marriage, then being honest from outset, defining our expectations if it all should end, should be as equally as open and honest. Legal status of pre-nuptial agreements The law in relation to pre-nuptial agreements has developed following the Supreme Court Ruling in the case of Radmacher v Granatino 2010. Following the court decision in this case the Law Commission published a report entitled Matrimonial Property, Needs and Agreements putting forward legislative reform, while this has not yet been finalised some of the proposals of the reforms may become law in due course, setting out the criteria for what will be known as a "Qualifying Nuptial Agreement". The agreements must meet the following:
- The agreement must be contractually valid, in that there should be no doubt that the parties entering into the agreement are doing so of their free will.
- It must be validly executed as a deed and contain a statement signed by both parties.
- It must not have been made within the 28 days before the wedding.
- Both parties to the agreement must have received disclosure of the other party's financial situation when entering into the agreement.
- Both parties must have received legal advice at the time they entered into the agreement.
- If the agreement fails to make sufficient financial provision for children, it will be set aside by the court.
- Both parties' needs must be met, by the settlement terms of the agreement. The possibility of ongoing financial provision for a party caring for children is important. An agreement that results in a party receiving nothing or very little would not be upheld by the court.
The law in respect of pre-nuptial agreements is by no way certain, but there are clear advantages to entering to the agreement. It allows for clarity, allowing you to agree at the outset what would happen in the event of your separation. There is transparency right from the beginning both parties know the others financial positions before entering into the marriage. In the long run, entering into the agreement could save you legal costs escalating should you divorce later down the line. You are able to ring fence pre-marital assets thereby offering as much protection as the court will allow to those assets you brought into the marriage. If the other party has significant debts, these can be isolated at the start, meaning it would be easier to protect your assets from being used to satisfy those debts later on. Although the thought of an agreement is unromantic, entering into an agreement that is fair, sometimes lengthy and laborious, can look to those life changing events, the birth of a child, the loss of physical or mental capacity, and still offer the protection needed. Pre-Nuptial Agreements may not be entirely binding, but they do go some significant way towards persuading the court about the parties' intentions when entering into the marriage. It is always better to consider with the benefit of forethought instead of hindsight. If you would like any further information of advice about entering into a Pre-Nuptial Agreement, then please do not hesitate to contact our family team on 0114 266 6660, who are more than happy to arrange a no obligation appointment with one of our expert family solicitors. Author: Alison Gaddes - Solicitor with Wake Smith Solicitors Limited Contact Alison at [email protected]
