Protect your assets with a prenuptial or post-nuptial agreement
Prenuptial agreements can provide greater certainty of financial outcomes, should your marriage end in divorce. Therefore, if you are about to get married it would be wise to enter into a prenuptial agreement beforehand.
Prenuptial agreements are now very much encouraged by the courts, as demonstrated by high-profile cases such as Radmacher vs Granatino and MacCleod vs MacCleod.
What is the difference between a prenuptial and post-nuptial agreement?
A prenuptial agreement is a contract entered into prior to marriage, which sets out the financial terms of the relationship. A postnuptial agreement does exactly the same thing, only it is created during your marriage rather than beforehand.
So, if you are married and don’t have a prenuptial agreement in place, entering into a post-nuptial agreement during your marriage can also significantly influence a subsequent divorce settlement.
What is the purpose of a prenup?
The purpose of a prenuptial or post-nuptial agreement is:
- To protect assets acquired before marriage
- To protect business or trust assets
- To protect your assets from your partner’s debts
- To protect your children’s financial interests
- To agree how you will manage your finances between you
- To agree the division of finances should your relationship breakdown
1. To protect pre-marital assets
If you or your spouse has significant assets acquired prior to your current relationship, there is no guarantee that these assets will be protected from division on divorce. This is because of well-established principles applied by the family court based upon sharing and needs. ‘Non-matrimonial’ (or ‘non-marital’) property is not defined with any certainty in case law. This is why many couples choose to enter into a pre or post nuptial agreement to record their agreement on how their assets will be divided should they separate or divorce.
2. To protect business assets
Likewise, business or trust assets are not necessarily protected on divorce, but a prenuptial agreement can be used to ‘ring-fence’ business assets and agree that these will not be shared if you divorce. This can help protect an interest in a business and can also help avoid a situation where an ex-spouse is awarded an interest in a business and has to participate in its running.
3. If you or your partner has debts
If you or your new spouse has significant debts, either now or in the future, a pre- or post-nuptial agreement is a good idea to protect the other’s assets from being used to satisfy those debts.
4. To protect the financial interests of your children
An existing Will is automatically revoked if you marry again, so new spouses are advised to make new Wills. This is particularly important where one or both of you are coming to the marriage with assets, or if the intention is to leave assets to anyone other than your new spouse, for example to children from your previous relationship.
A Will can be made in contemplation of marriage, but if this is not done, any existing Wills will be revoked on marriage and assets might not end up with the people they were intended for.
A prenup or post-nuptial agreement can be used to specify that you both agree to make Wills, in order to end up with the result you both desire. A prenuptial agreement can also protect the financial interests of children from your previous relationships by ensuring that certain assets are ring-fenced for them. The agreement can also set out what should happen to you and your spouse’s assets on death, to support the provisions made in your Wills and clarify what should happen to certain assets to protect your children’s and grandchildren’s inheritance prospects.
On divorce, the whole Will is not revoked but any gifts to, or appointment of, the ex-spouse as executor will be automatically revoked, This is why a review of your Will is also advised to ensure it will still achieve your desired result.
5. To agree how finances will be managed during the marriage
A prenuptial agreement is also often used to agree and record how a couple intends to support themselves financially during the marriage. For example, whether you and your spouse wish to pay for household expenses equally or in proportion to your income or assets.
Having discussions about these matters at an early stage can help ensure that you are both on a level footing and going into the marriage with a clear understanding of how your finances will be managed in your marriage and in the event of separation or divorce.
Discussing financial issues can be one of the most difficult aspects of marriage but having these conversations for the purpose of preparing a prenuptial agreement can actually help improve communication and strengthen your relationship.
6. Amicable separation or divorce
No one enters marriage expecting it to fail, however agreeing in advance how your finances would be divided if it did can help avoid a great deal of uncertainty, time and stress if the marriage does eventually break down.
It also gives you the freedom to agree your own terms, which would not be the case if your financial settlement ended up in contested financial remedy proceedings, where a solution could be imposed on you by the court.
Litigation is generally costly, protracted, time consuming and stressful. Whilst the preparation of a pre- or post-nuptial agreement will incur costs, it is usually much less expensive to negotiate and draft one than to litigate about the division of finances should the relationship break down.
How Clarke Willmott can help you
A pre or post-nuptial agreement can only be drafted by a qualified solicitor. We can advise you on how best to create an agreement between you that is fair, clear and dignified for both parties.
If you own a business, have inherited wealth, property or other assets you regard as being ‘outside’ of the marriage, we can also provide expert legal advice on how to protect those interests in the event of a divorce.
We also have international divorce specialists on hand who can draft prenuptial agreements for international couples and can advise couples with existing prenups whether these agreements are enforceable in the country where the divorce is taking place.
Why choose us for a prenup or post-nuptial agreement?
Our clients choose us to advise on prenuptial and post-nuptial agreements because:
- Our Family Law team has a sensitive and caring approach
- We can access the entire firm’s legal expertise across many areas of law
- We specialise in financial arrangements and divorce involving businesses
- We are highly rated for family law in Legal 500 and Chambers Guide
- As members of Resolution we are firmly committed to its principles
- We have trained collaborative lawyers and mediators on the team
- We always work efficiently and cost effectively
Contact a family law solicitor
For advice on entering into a prenup or post-nuptial agreement, call 0800 422 0123 or contact us online for a confidential initial consultation. We have family law specialists in London, Manchester, Bristol, Cardiff, Birmingham, Southampton and Taunton.