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.
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.
More recently, in August 2009, in the case of Radmacher v Granatino, the court has given further encouragement to couples wishing to guard against the financial issues that will arise should the marriage fail.
A pre-nuptial agreement should be discussed at an early stage before the wedding; the day before is probably too late!
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 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.