A guide to Pre-Nuptial and Post-Nuptial Agreements
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
A guide to Pre-Nuptial and Post-Nuptial Agreements
Winckworth Sherwood Family Guide
This guide is intended to provide an overview of
nuptial agreements and includes:
• the key considerations you should be aware of
when it comes to nuptial agreements
• the benefits of having a nuptial agreement
• practical steps to put an agreement in place
• the future of nuptial agreements - potential
legislative changes recommended in a Law
Commission report
If you would like to discuss anything raised in this
guide, our experienced family law team is here to
help. Their contact details can be found on the final
page.
For more information, please visit
wslaw.co.uk/family.INTRODUCTION
Evidence of the cost and In short, a nuptial agreement, which can be
entered into before (pre-nuptial) or during
acrimony caused by divorce (post-nuptial) a marriage or civil partnership,
can beSUBHEADING
found on an almost is a written agreement that sets out what
daily basis in the UK media, the couple agrees should happen in relation
laying bare the separation to their finances and other matters should
details of celebrities and the the relationship break down in the future.
It may provide for the division of capital
uber-wealthy. The existence and property, and whether and how much
or absence of nuptial maintenance will be paid by a former spouse
agreements is regularly to the other.
referenced in the gossip
columns as being crucial to Nuptial agreements are popular and
the division of the millions of enforceable elsewhere in the world and,
following the landmark case of Radmacher v
such couples. Granatino in 2010, in England and Wales they
have gained strength in their ability to protect
However, pre and post nups the assets of those entering into marriages or
are not just for the rich and civil partnerships.
famous. They are a must
In the Radmacher decision, the Court
for financial planning and indicated that it may uphold the entire nuptial
for getting your ducks in agreement, or give considerable weight to it, if
a row. They need not be certain requirements are met.
controversial
when approached fairly and
sensitively by your lawyer.KEY CONSIDERATIONS
Nuptial agreements: key considerations
1 4
The first and most important factor Nuptial agreements should be
to consider is that, unlike in other reviewed regularly to ensure that
jurisdictions, English Courts have they remain fair and relevant.
the discretion to decide on a case- The following scenarios may impact
by-case basis whether prenuptial the agreement for example:
agreements should be relied on.
• having children;
• unexpected windfalls or
2
The terms of the agreement are likely unexpected loss;
to be given considerable weight by • the loss of a job or inability to
the Court if entered into willingly work;
by the parties, with full information • the health of the parties;
available to them, and each intending changing materially; or
that the agreement should be applied • significant inflation or deflation.
should the marriage come to an
end. However, it could be ignored
completely if it would be unfair to
5
hold a party to it, for example, where Even if you did not enter into a
it does not meet the reasonable nuptial agreement before you
needs of the children or one of the married or entered into a civil
spouses. partnership, it is still possible to
3
There is no ‘one size fits all’ draw up a post-nup. The procedure
agreement. If the agreement fails is exactly the same as the drawing
to take into consideration all the up of a pre-nup, and the Court will
relevant circumstances, it could be approach it in the same way.
deemed as unfair and therefore fail
to have the desired effect. Creating
a bespoke agreement does not
entail huge expense. Rather, it is an
acknowledgement that each couple
and each situation is unique.THE BENEFITS OF HAVING A NUPTIAL AGREEMENT
What are the benefits of a nuptial agreement?
• On divorce, all assets are placed into a notional “matrimonial pot” for division. This means that any
asset (regardless of strict legal ownership and/or financial contributions) could be subject to a Court
order requiring it to be transferred to the other spouse or divided between you as the Court thinks
is appropriate and/or fair. Provided that it is entered into correctly, a nuptial agreement can be an
effective way of protecting assets on divorce or dissolution.
• Agreeing how your assets should be divided if you were to divorce before you marry can be easier
than negotiating this once relations have turned sour. A nuptial agreement can provide certainty as
to what the outcome should be, rather than having to start from scratch when your relationship is at
its worst
• Nuptial agreements can also save expense and reduce the acrimony between separating couples if
the terms are fair.
• As such, it may be possible to limit the Court’s involvement to approving the agreed financial
arrangements, as opposed to requiring it to decide on those arrangements itself.
Nuptial agreements are particularly advisable in the following scenarios:
• Where the wealth of the parties is • When both parties are bringing assets
not equal. into the marriage, and they both agree
that anything acquired prior to the
• Where there are family businesses marriage remains the property of that
involved. spouse.
• Where one of the parties has • Parties with future wealth prospects,
significant inheritance prospects, or such as those with trust funds or careers
may benefit from gifts from their that could be stellar.
family.
• Couples with international ties who
• Where there are parties with assets want a nuptial agreement to mirror one
acquired during previous marriages that they have had drawn up in a foreign
and/or relationships that they would jurisdiction.
prefer to ring fence, in particular for
children of a previous union. • Where there are existing debts.PRACTICAL STEPS
Practical steps to putting a nuptial agreement
in place
2
Our family law team has noted a Consider what you know about your
Our family law team
change has noted
of attitudes a change
towards nuptial partner’s finances, and how much
of attitudes towardsin
agreements nuptial
recentagreements
years, and is your financial health is currently
in recentadept
years,atand is adept linked through joint assets or
putting suchatarrangements
putting
such arrangements in place. Nevertheless, liabilities.
in place. Nevertheless, there is
there is still
still concern
concern inin some
some quarters
quarters
that a nuptial
that a agreement is unromantic,
nuptial agreement is
difficult unromantic,
to discuss, ordifficult
‘for other people’.
to discuss or
3
However, ‘for other agreements
nuptial people’. However,
are nuptial Reflect on your respective priorities
agreements and attitudes. It is not uncommon to
increasingly commonare increasingly
and, common
if approached be unsure at this stage and this can
and, if approached with
with sensible and sensitive assistance,sensible be explored as part of the process.
their useand
cansensitive
merely be assistance, their use
part of routine and
can merely be
prudent financial planning. part of routine and
prudent financial planning.
For those considering a nuptial agreement,
4
For those
the following considering
initial steps can bea nuptial Call our family team for an informal
agreement, the following initial steps initial conversation to establish
particularly useful:
can be particularly useful: whether a nuptial agreement might
assist in your circumstances.
1
Take stock of your personal financial
situation. This need not be an
overwhelming exercise. The most
5
important questions are: With our assistance and taking into
account your personal circumstances,
a. What do you have? As well as plan effective, amicable
property and liquid capital, consider communication with your fiancé or
other valuable and personal items, spouse.
such as art collections and jewellery.
b. What might you have in the
future? People often forget to factor
in inheritance or benefits from trust
funds.THE FUTURE OF NUPTIAL AGREEMENTS
The future of nuptial agreements
• In its 2014 report, Matrimonial The recommended requirements for a
Property Needs and Agreements, qualifying nuptial agreement are that:
the Law Commission introduced
the concept of “qualifying nuptial • The agreement must be contractually
agreements”, which could be valid (and so for instance not be
enforceable without necessitating entered into under duress);
the involvement of the Court, and • It must be made by deed and contain
recommended that these should be a statement confirming that the
introduced into our legislation. parties understand its effect;
• That said, the report concluded that it • It must not be made within 28 days of
should never be possible to contract the marriage or civil partnership;
out of providing for each party’s
financial needs. • There must be disclosure of material
information about the other party’s
• However, six years later, those financial situation;
recommendations have not yet
been enshrined in law, and there • Both parties must have received
is no guarantee that they will be. independent legal advice at the time
With Brexit and the fallout from the that the agreement was formed; and
Covid-19 pandemic to dealt with, it
seems unlikely that there will be much • It will not be possible to waive the
parliamentary appetite (or energy) to right to disclosure and legal advice.
address these recommendations any
time soon.CONCLUSION
Conclusion
Although we tend to hear about As matters stand, if a separating couple
cannot agree on a fair division of their
nuptial agreements in context assets, and their legal advisors have
of the super wealthy, they are exhausted negotiations, then ultimately
a really useful tool for a lot of it is for the Court to decide what assets
people and it makes good sense a party should receive on divorce or
dissolution. To change this position so
to at least investigate how one that a nuptial agreement is automatically
might work for you. binding on the parties would require
Parliament to pass new legislation. It has
Even if you were to decide not yet done so.
not to enter into a nuptial It is important to remember that within
agreement, simply having an the jurisdiction of England and Wales,
awareness of their existence nuptial agreements remain unenforceable
can prompt you, as a couple, in their own right. However, without
doubt they are regarded as a valuable
to have an honest discussion tool to safeguard assets in the event of
about finances prior to their relationship breakdown. The case law
wedding. which has developed since Radmacher
clearly indicates that nuptial agreements
usually do reduce the level of an award.
Therefore, we advise clients to execute a
nuptial agreement where possible.CORE TEAM
Our core team
KATIE SPOONER Katie specialises in complex, high value and often
emotionally charged matrimonial cases, involving children,
Partner cross-jurisdictional issues and substantial assets.
+44 (0)20 7593 5032
kspooner@wslaw.co.uk
JIM RICHARDS Jim is a Senior Associate in the Family team. Jim trained at a leading
firm in Kent before working in London at a variety of firms. Jim has
Senior Associate in depth experience in relation to financial claims, including those
+44 (0)20 7593 5009 with an international element but is equally at home dealing with
jrichards@wslaw.co.uk complex disputes involving children, and was for many years a
member of The Law Society Children’s panel.
Anna-Laura’s practice includes divorce and complex financial
ANNA-LAURA LOCK
matters, especially pre and post nuptial or civil partnership
Senior Associate agreements, cohabitation and cases involving an international
+44 (0)20 7593 0382 element. She also advises clients in relation to issues involving
alock@wslaw.co.uk children following the breakdown of a relationship.
Selena advises on a wide range of issues associated with the break-
SELENA ARBE-BARNES
down of marriage and relationships, including complex children and
Associate financial matters.
+44 (0)20 7593 5071
sab@wslaw.co.uk
Hannah has a wide range of experience working on both children and
HANNAH GUMBRILL-WARD
financial matters, including relocation cases and complex financial
Solicitor remedy proceedings.
+44 (0)207 593 5065
hgumbrill-ward@wslaw.co.ukOur Family Team is part of Winckworth Sherwood’s Private Business and Wealth group, which provide a range of legal services to support individuals and their business interests, including: • Tax and estate planning • Succession planning • Probate • Trust management • Family law • Philanthropy • Family office services • Employment • Commercial and residential real estate • Dispute resolution • Reputation management • Cyber security • Data protection • Corporate and transactional advice
“This team is one to watch”
THE LEGAL 500 UK 2020You can also read
