Whether you love or despise them, Pre-Nuptial Agreements (Pre-Nups) are on the rise, especially amongst people who have amassed considerable wealth, or who are from a wealthy family who demand the family silver be protected! We are also increasingly helping clients with Pre-Nups who are marrying for a second time and/or have children from earlier relationships that they wish to protect financially.
Pre-Nups are not new and we are all familiar with celebrities diving for cover in their carefully crafted contractual bunkers when the marriage fizzles out. But what about the rest of us? Don’t we need help from relationship apocalypse bearing in mind approximately 42% of marriages break down? Surely if you can’t protect yourself from falling in love and marrying, you can at least protect yourself from the horrors of an acrimonious financial split if you have a proper Pre-Nup.
We completely sympathise with people who are embarrassed at the prospect of negotiating an agreement to deal with the end of a marriage that has not yet even begun, but blind optimism is not always a good thing. After all, shouldn’t we all prepare Wills before we die to avoid chaos for our loved ones on our death (although I am not for one moment suggesting that divorce is as inevitable as death!)?
The best way of dealing with the discomfort is to be as fair and transparent as possible with your partner as the agreement is being negotiated. It should not be a one-way street and at TWM, we always try in the interest of fairness for all concerned to include a financial safety-net for the financially weaker party. This has the added benefit of ensuring that the Pre-Nuptial Agreement has the best chance of withstanding the scrutiny of the court if the marriage fails, because the court will want to ensure that the agreement is fair – otherwise it has the power to disregard it.
Generally speaking, there is no denying, however, that in almost every Pre-Nup, one of the parties will ‘win’ and retain their wealth (often pre-marital or inherited) and the other will ‘lose’ – which means relinquishing certain financial claims they might otherwise have. The key purpose of the Pre-Nup is to try to oust the jurisdiction of the court and to achieve certainty for the parties if the marriage fails. Pre-Nups can, however, also substantially reduce conflict and cost while giving the parties control over the consequences of a marital breakdown. It is well known that people prefer predictable outcomes, and it should be noted that, although the Law Commission recommended in 2014 that Pre-Nups should be legally binding in the UK, this hasn’t actually been enforced yet. Instead, courts are taking matters into their own hands and family lawyers have seen numerous recent cases where Pre-Nups are given decisive weight by the courts and treated as if binding, but only if they are voluntarily entered into, properly drafted, and meet certain safeguards.
Lawyers play a vital part in ensuring that Pre-Nups are properly put together so that they can withstand judicial scrutiny. As I tell my clients, if a Pre-Nup is to serve as a lifeboat in troubled waters, you’d better make sure it’s seaworthy from the very outset!
A Pre-Nup is a carefully crafted, bespoke document – please resist the temptation to download or recycle someone else’s, because one size does not fit all when it comes to agreements like this. And most of all, please concentrate on what is to be shared, not just excluded, since no one wants to feel cheated at the altar!