Why you need a pre-nuptial agreement even if you’re not filthy rich
Nigella Lawson was glad to have entered into one before her marriage to Saatchi, whereas Dragon’s Den tycoon Duncan Bannatyne claims to have lost most of his wealth through his divorce because he hadn’t signed one before saying his vows the second time.
We’re talking pre-nups, of course. These formal pre-marital agreements are in the news again because the Law Commission is expected to propose this week that they become legally enforceable in Britain.
Ann Corrigan, specialist family lawyer and founder of Clarity Family Law in Buckinghamshire, gives the lowdown on pre-nups and explains why you should care – even if you’re not filthy rich.
What is a pre-nup?
A pre-nup is a formal agreement/settlement entered into prior to marriage or a civil partnership.
It is used to set out who owns what at the time of the marriage and how the couple plans to divide these assets if they should split up.
Some people, including religious leaders such as Roman Catholic bishop, The Right Rev Mark Davies, argue that deciding how to separate before tying the knot undermines marriage, whereas others simply feel it’s unromantic.
However, the sad reality is that around 43% of marriages in the UK and Wales end in divorce and if you’re not prepared, you could find yourself in a very unenviable financial situation, as Duncan Bannatyne appears to have done.
A pre-nup is a good idea in most marriages – particularly as couples often tend to get married a bit later nowadays, which means they’re likely to have accomplished some wealth of their own by that time.
The idea of the agreement is to protect or ‘ringfence’ their individual wealth and/or any inheritances they may bring into a marriage, should they decide to separate.
It becomes even more important in the case of marriages/civil partnerships later in life or second marriages/civil partnerships where there may be children from a previous marriage or where one partner moves into the already-owned home of the other.
A pre-nup can contain more than just how to split your wealth – in the US they often contain clauses about how the couple should dress, how often they should exercise and even how often to expect sex!
Are pre-nups legally binding in the UK?
At the moment, no – and that is what the Law Commission is expected to propose next week – to make pre-nups legally enforceable.
But even now, since a landmark decision in Radmacher v Granatino, the court is likely to attach weight to such an agreement PROVIDED the following criteria are met:
- If both parties entered into the agreement freely
- If both understood the implications of what they were agreeing at the time
- It is fair to hold the parties to the agreement
So, how can you make sure your pre-nup is upheld – as the law stands now
- Obtain independent legal advice, which helps to show both parties understood the agreement.
- Full financial disclosure (both parties should be 100% honest about what they own) to show that they were fully aware of the financial implications of the agreement
- The agreement must be entered into freely to prevent one party alleging later that they entered into it under duress or undue influence.
- Ensure it is realistic and fair
- Provide for future changes – circumstances change, so most pre-nups should only be valid up until the birth of the 1st child or for up to 5 years.
This is a complex area of the law and one where taking specialist family law advice at the outset could save heartache and dire financial circumstances later on.
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