A pre-nup could protect you from losing your inherited or earned wealth, property investments, and other assets. But what is it, and how do they work?
There used to be a strong stigma around pre- and post-nuptial agreements. People used to think it resembled a lack of trust or commitment. But times have changed along with the modern family. Pre- and post-nuptial arrangements are increasingly popular. They protect the legacy of property portfolios and assets to reflect modern living arrangements.
Having legal protection in place ensures the nuptials get off on the right footing for everyone. It also provides greater certainty that your property investments remain under your name, for you and future generations to come, should a marriage fail.
A pre-nuptial agreement is when two people getting married sign a legal document about divorce arrangements. It may seem strange to want to plan a future with someone – and your potential separation – but it’s important for anyone with wealth or assets to consider.
For example, if one partner is considerably more wealthy than the other, the agreement will take this into consideration. There may be a clause, for example, that the new spouse is not entitled to any wealth gathered by the other before the date of their marriage. This protects people from those seeking to marry a richer person with the intention of divorcing them for their money later on.
A pre-nup can include other things, too. It might cover inheritance provision for children from a previous marriage, for example. It could also protect you from your spouse’s debts accrued prior to getting married.
You can also sign one after you get married; that’s called a post-nuptial agreement.
At the moment, pre- and postnups aren’t fully legally binding but they are more relevant today than ever before.
While it’s never guaranteed that a court will uphold the conditions of the agreement, if the pre- or postnups are drawn up correctly then it’s very likely to be given serious consideration by the court.
Property owners should ensure that the agreement sets out clearly the all of the property owned. Also list how it would be divided if you divorce. This gives you the best chance of keeping your properties – even if your relationship breaks down.
It’s best to use a specialist to draft the document to ensure it meets certain legal conditions. For example, you need to ensure that the agreement is drawn up at least 21 days before the wedding. It also must include details of financial circumstances. Just one small error could make it invalid. Checking it meets requirements will help it to provide the requisite protection.
The possibility of potential claims made on assets in the event of a marriage breakdown is the last thing people want to consider when planning a wedding. But the age-old analogy of ‘prevention is better than a cure’ is never more relevant when it comes to protecting personal wealth in marriage.
Without a pre-nup in place, the court freely decides who gets what during divorce. Since the 2010 Supreme Court case of multi-millionaire heiress, Katrin Radmacher, and her former husband, Nicolas Granatino there is a now a presumption that a prenup will be upheld. That is, however, overridden if there has been an evident lack of information, advice, or there isn’t a suitable provision for children in the agreement.
Prenups can also make sure the division of property and other assets is fair over a separation period, too. The bit between agreeing to divorce and becoming divorced can be a long and difficult road. Having the prenup in place makes it clear who can live where, or owns which property, before divorce proceedings begin. Using a pre-nup to decide (and act on) your separation agreements also helps divorce proceedings in court.
Seek professional advice for your pre-nup. The document needs to be signed 21 days before you get married. So, it’s best to start the process around six months before the big day to give plenty of time to sort out the detail. This is particularly true when it comes to managing a number of properties, where there are various taxes and mortgages to consider. That way the momentous big day is not lost with last-minute negotiations. Instead, everyone can enjoy it with clarity and peace of mind that protection is in place for the wealth of the wider family and future generations to come.
By Simon Fisher, Partner in the family law team at Gardner Leader solicitors
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.