It may be that the divorce rate for heterosexual couples in England and Wales has hit a 45-year low, but if your marriage becomes a statistic, how can you protect your wealth?
A prenuptial agreement, signed before the marriage, can set in place what will happen to your income and assets before the arguments begin.
Prenups are becoming more popular in England and Wales, often spearheaded by parents as their offspring tie the knot.
Ashley Wynne, Head of the Family Law Group at No5 Barristers’ Chambers, said: “Historically I drafted occasional pre-nuptial agreements for hugely wealthy individuals. I am now being asked to draft them far more regularly and in cases which do not involve unusually large assets”
The reasons for signing a prenup vary, but for some it is often due to an existing or expected difference in their wealth. Equally, inheritance can be significant as one person may wish to protect assets that may have been built up by their family, and to protect each party from debt risk.
“Over 60s, who are marrying for the second time, are also increasingly turning to the prenup to protect their children’s inheritance – which can often include wealth sourced from an earlier divorce settlement!
The landmark case of Radmacher v Granatino set a benchmark as it is the first time that a court said a prenup would be upheld unless one person could show why it should not be.
Ashley added: “The decision was a ‘game-changer’ in terms of the status prenups are afforded within the English and Welsh courts due to a change of legal emphasis – the party wishing to avoid the effect of the agreement is required to prove that it is unfair (rather than the other party being required to prove that it is ‘fair’ or ‘reasonable’ as remains the case in Scots Law).
“The English and Welsh courts retain the discretion to ‘avoid’ the terms of the agreement if its impact would be unfair to one of the parties or in particular, any dependent children of the marriage. Case-law (and recommendations from the Law Commission) suggests that there are certain features of a prenup that should be present in order to give the agreement the best chance of being upheld:
- Both parties should take separate legal advice regarding the agreement. Prenups should be drafted by specialist lawyers who are acting to protect their own client’s interests.
- Both parties must ensure that they understand the terms and effect of the agreement and neither party should feel pressured or coerced into the agreement, it should bear in mind that the agreement is suggested by the party who feels that he or she has brought significant assets into the marriage.
- Both parties should provide full disclosure of their property and assets. It will be difficult to persuade a court to uphold an agreement in circumstances where the other party had no idea as to the nature and extent of the assets the agreement was intended to protect.
- The agreement should not be signed in the days immediately prior to the wedding. Often, one party will make the agreement a condition of the marriage going ahead, and when the wedding is booked and paid for the other party is much more likely to feel pressured into signing.
“Complying with these basic requirements should limit the prospects of the agreement being regarded as ineffective in the event that the marriage does end in divorce on or before the 30th anniversary.”
Ashley Wynne is Head of the Family Group at No5 Barristers’ Chambers. To view his full profile, please click here: https://www.no5.com/barristers/barrister-details/204-ashley-wynne/