Pre Nuptial Agreement
There is a lot of controversy over pre-nuptial agreements, particularly in terms of how enforceable they really are in legal terms.
Taking a romantic view of it, you shouldn't really need one. However the reality is that in certain - albeit fairly rare - circumstances, a pre-nuptial agreement is a sensible precaution. UK solicitor Sue McGaughran to gives us her views on the topic and how things stand currently in the UK .
Pre-nuptial/ pre-marriage agreements: advice from UK solicitor Sue McGaughran
We associate them mainly with celebrity marriages, because for years celebrities have been given legal advice about protecting their assets on marriage. That advice includes setting a limit on divorce pay out. You don't, however, have to be a celebrity. If you are looking to protect your assets on marriage there is protection available regardless of how you earn your salary. Whilst the divorce rate in the UK seems to be slightly decreasing from the all-time high in 2002, there were still over 141,000 divorces in 2005. Marriage is no longer until death do us part so it pays to look at where the law currently stands.
What is a pre-nuptial agreement?
Effectively this is an agreement between two people, before they marry; it sets out how their assets will be dealt with on divorce. Currently the majority of agreements drafted relate to marriage and divorce. Increasingly those couples wanting to live together and share their lives also want to deal with the potential financial exposure on breakdown of that relationship (often called a Pre-relationship Agreement) and those entering into Civil Partnerships are looking to enter into similar agreements (often called a Pre-Civil Partnership Agreement).
The agreement can deal with all and any assets from the home the couple live in, to who will get what part of the CD collection, or the pets.
Is a pre-nuptial agreement binding in the UK ?
Unfortunately, whilst in many States in the USA pre-nuptial agreements are binding on individuals as the marriage breaks up, it is not yet quite the same in the UK , although many feel that the UK will eventually follow USA law. Previously the UK courts, when dealing with a divorce, gave little consideration to a pre-nuptial agreement. Now the courts are taking them into consideration.
To determine how closely the terms of the agreement are adhered to the court will now consider:
- Was there a full and frank disclosure of both parties' financial circumstances and assets before they entered into the agreement?
- How long before the wedding was the agreement signed? (Obviously the court won't want it to be on the wedding day, because it may reflect pressure on one or both parties.)
- If it was some time before the wedding, they will consider whether since the agreement, but before the marriage, the financial circumstances of one party changed (e.g. a salary increase, one party took a career break to care for the parties' child, etc); ideally not less than 21 days before the wedding but not more than about three months before either.
- Following on from above, what significant changes have there been since the agreement was signed? for example again salary increase, etc, but also the length of the marriage and the health and wealth (e.g. one party inherited from parents) of both parties.
- Was any pressure (emotional or financial) placed on either party before they signed the agreement? (Pressure could be from the other party, but could also be from relatives, etc, too.)
- Did both parties or either party get any independent legal advice before they entered into the agreement? (There is likely to be less consideration of the agreement by the court if one party did and the other did not.)
Increasingly the existence of a pre-nuptial agreement will influence any Order that a Court makes on the dissolution of a marriage or breakdown of a relationship.
Why?
Even though they are not binding on the UK court increasingly people are entering into them because they are seen as a protective measure.
They can help protect:
- a family business
- children
- assets from a previous marriage
- assets in another country
- the marriage by laying down the financial expectations with full disclosure at the outset.
What can I put in the agreement?
The agreement can cover anything sensible including:
- How both parties' income will be dealt with during the marriage and who will pay for what.
- How any debts the parties have before the marriage will be dealt with.
- Dealing with the assets that the parties owned before marriage, etc
- What will happen to any home the parties live in
- What will happen to any joint savings
- What will happen to any furniture
- What will happen to any life insurances and pensions
As an example, some of the 'celebrity' agreements include clauses about:
- Cheating and what will happen if one party does cheat.
- An equal share of housework.
Some more bizarre clauses (which we would not really recommend) include clauses about
- not leaving the toilet seat up
- equal control of the remote controls to TV, DVD, etc.
How do we get one?
Step 1
Ideally, both parties need to sit down and discuss what they want to do. There needs to be a full and frank disclosure from both parties of their financial circumstances and assets before they draft the agreement. It is also wise to include your life-plans here; such as if the parties intend to have or adopt children, is one party taking a career break, etc?
Step 2
Draft out in basic non-legal terms what you both agree and maybe a brief explanation why, e.g. we want the house in which we are living at the time we split up to be sold, the mortgage, any legal charges on it, and all expenses to be paid out of the sale proceeds and then the left-over money to be split as to A 40% and B 60% because B alone paid the deposit on the house of £10,000.
Step 3
You can then draft the agreement yourself although it would be wise to either:
i) use a template document - there will be some things you forget and the template may serve as a prompt or
ii) get an agreement professionally drafted.
Step 4
We recommend that you either both get independent legal advice on that draft agreement, or you both agree not to. The latter may be acceptable where the assets are small and the agreement is very straightforward.
Step 5
The agreement can then be signed by both of you and you both keep a copy.
Sue McCaughran
Solicitor, Lime One Ltd
www.limeone.co.uk
