Nuptial Agreements – Nothing romantic about these agreements
March 20, 2018
Post nups are more likely to be upheld by the court than pre nups, because there is deemed to be less pressure on the spouse to sign after the marriage.
Most of us are familiar with pre nuptial agreements, those documents that can suddenly appear just before a wedding and often after the invites are out despite the general advice to have one in place well in advance of the wedding vows. Designed to divide up the assets between the parties in the event of a divorce or relationship breakdown, minus the costs and stress involved of protracted negotiations or court proceedings, these agreements aim to protect assets acquired prior to the marriage and those inherited or acquired after the marriage to an extent. Ring fencing assets in this way can also provide for children from a previous relationship or to retain control over a business. These agreements, whilst still not legally binding in the UK, are now recognised and will generally be upheld in a family court if they are determined to be fair and reasonable, and if both parties have received independent legal advice and neither party has been put under pressure to sign.
But what happens if you acquire wealth or assets during the marriage which may be difficult or unfair to split 50/50 in the event of a divorce, and where there is no pre nup? A post nup could be the answer. As with pre nups, financial disclosure is required and both parties require legal advice. However, for some people, particularly the financially weaker party there is less pressure to sign as they are already protected by a range of matrimonial laws. If the relationship is at risk of failing they may just prefer to take their chances at court and if a court considers that the terms are unreasonable and fail to meet the needs of the parties (particularly the children) they can, and will, reject the agreement outright.
So, what are the advantages of a post-nup? For the party creating the wealth, they can be manifold. They are more likely to be upheld by the court than pre nups because there is deemed to be less pressure on the spouse to sign after the marriage. As with pre nups, there has to be comprehensive financial disclosure at the outset but it is worth bearing in mind that the agreement itself does not have to cover everything and can focus only on assets which one party wish to protect. If for example you wish to ring fence just your business assets, perhaps also to protect others involved in that business, or a property or a family inheritance, then it is possible to do just this and a post nup can be the answer.
However, raising the idea of a post nup with a spouse after the wedding day can be even more difficult than raising the idea of a pre nup before it, and not the most romantic conversation to have over the dinner table. But if, for example, your business is the main source of the family wealth then it makes sense to protect its future for everyone concerned. Many divorces have signalled the end of a thriving business or seriously curtailed the benefits to be derived in the future for both parties due to the assets being considered joint property during divorce proceedings and having to be divided.
The benefits of post nups are being recognised and there has been a recent increase in post nups, mainly due to the influx of wealthy individuals moving to the UK and in particular, to London. Still considered to be the divorce capital of the world, with its extremely high financial awards, it makes sense to put in place whatever protection is on offer for these individuals.
A recent trend appears to confirm that many married professional couples are electing to enter into post nups in order to set out a fair division of assets to better protect both parties, and any children they may have, in the future. Other than the success of a new business or receiving a windfall benefit, the arrival of children, redundancy, illness, or any number of other factors can all affect an income stream and it is a sensible couple that provides for this at the outset. Providing for a divorce settlement is contrary to the happily ever after vision expected by most married couples but post nups should be treated as a safety net to provide financial protection for everyone in the event the relationship unfortunately does come to an end. Hopefully they will not be needed, but the evidence shows that post nups have proved to be highly effective in terms of time, cost and the preservation of a cordial relationship with the other spouse going forward.
If you would like to talk to a member of our Family Law team about nuptial agreements please contact Sharon Trimmer.