As the seasons change and the spring sun starts to shine, your thoughts may already be turning to the summer wedding season.
If you are set to tie the knot this year, then we want to congratulate you, but also bring your attention to the need to protect your assets. This is especially true in cases where a couple’s individual wealth differs significantly, as divorce proceedings can leave the higher-value assets exposed and vulnerable.
When handled delicately, pre-nuptial agreements can be an opportunity for honest discussion, but only if their value is well understood.
What is the value of a pre-nuptial agreement?
Before entering into a marriage or civil partnership, it is possible to create a pre-nuptial agreement in order to clearly define the division of assets within the relationship.
If you are married or in a civil partnership, it is possible to create a post-nuptial agreement in order to establish those same protections. It might feel pessimistic to create a contract that will only come into effect should the relationship break down, but the limits of its activation are part of the value.
In much the same way that few people expect to use an insurance policy, the peace of mind provided by having an arrangement in place can reduce the stress of trying to avoid disaster. For instance, having a pre-nuptial agreement that clearly protects inherited wealth or the assets related to a business may ensure that those assets do not become a source of conflict within the relationship and will not be on the line in a divorce.
There can be a stigma around the lack of trust that a pre-nuptial agreement may signify, but this view is unhelpful. Instead, it can be seen as a way of facilitating financial discussions ahead of a marriage and preserving the individual value of each party’s estate.
How do I make a legally binding pre-nuptial agreement?
In England and Wales, pre-nuptial agreements are not currently legally binding. However, there is still merit to creating a pre-nuptial agreement as it can inform the court should divorce proceedings be undertaken.
As established by the case of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, if a pre-nuptial agreement is deemed to be reasonable, fair, and created without any pressure placed on either party, it will be taken into consideration by the court.
The division of assets will generally be done in alignment with the pre-nuptial agreement, but the handling of children is a more complicated matter. While the pre-nuptial agreement can make a suggestion as to the preferred custody arrangements of children, the court must act in the best interest of the child.
This may mean disregarding the pre-nuptial agreement entirely in that regard if it is determined that it is insufficient at accounting for the needs of the children and dependents involved.
Ultimately, a pre-nuptial agreement’s true value comes from providing clarity and stability when entering into a marriage or civil partnership so that you can start a new life together with less stress.
Our expert team can help you to craft a pre-nuptial agreement that caters to the unique needs of your relationship.
If you need any further advice, contact Adeeba Naseem, Head of our Family and Relationship Team, on 020 3972 67824193 or on adeeba.naseem@mackrell.com.
