Pre-Nuptial Agreements – Do you really need one?
It has generally been thought that pre-nuptial agreements are just for the rich and famous. In recent years there has been a shift in the way people perceive pre-nuptial agreements and more and more people are considering them before entering into a marriage. Pre-nuptial agreements tend to be more popular for people embarking on a second marriage when they have assets of their own and/or children from previous relationships.
What are the advantages?
- CLARITY – Discussions have already taken place surrounding the financial position should the relationship come to an end. It is made clear at the outset what each parties intentions are and provides clarity as to each other’s personal property that will form ‘non-matrimonial property’;
- CERTAINTY – It can be agreed at the start of the marriage how the finances will be divided in the event of separation;
- TRANSPARENCY – In the pre-nuptial agreement each party’s financial situation will be disclosed. This generally includes last 3 months wage slips, last 12 months bank statements, valuation of any assets, details of any liabilities and pension valuation;
- MONEY SAVER – Going to court is expensive. By having a conversation and reaching an agreement before you enter into a marriage it may save on any lengthy court battle surrounding the finances of the marriage in the unfortunate circumstances that parties separate;
- PROTECTION OF ASSETS – A pre-nuptial agreement allows either party to protect their assets and ensure that any assets acquired pre-marriage are ring fenced;
- DEBT PROTECTION – A pre-nuptial agreement may be agreed to ensure that another parties debt remains their debt and that any marital assets are not utilised to repay their debt;
- LOSS OF CAREER – An agreement can be reached to compensate a party if they give up their career to care for children and that the loss of earnings and lack of career prospects is taken into account when agreeing any settlement;
- PROTECTION OF FAMILY MEMBERS – In the event of second marriages or parties entering into marriage who already have a child or children, a pre-nuptial agreement can be used to protect their financial interest to ensure certain assets are ringfenced for them;
- PROTECTION OF BUSINESS PARTNERS – If either party has an interest in a family or small business, a pre-nuptial agreement can protect that interest in the event that the relationship breaks down and ensures there is little or no disruption to the business if the marriage breaks down;
- PROVISION ON DEATH – The pre-nuptial agreement can set out what should happen to your assets on your death. This can support the provision contained in your will and clarify what should happen to certain assets;
- TAILOR MADE – The pre-nuptial agreement is agreed as per your terms and tailor made. It provides the freedom to agree terms without the court imposing them.
What are the disadvantages?
- NOT LEGALLY BINDING – If not drafted correctly the court may hold little or no weight to the pre-nuptial agreement. It is important that the agreement includes full financial disclosure of both parties, ensures that both parties obtain independent legal advice when entering the agreement and that it is prepared in good time before the marriage takes place. The court may also discredit a pre-nuptial agreement if they think it is unfair to the other party;
- CHILDREN COME ALONG – It will be hard to claim that the agreement was made in the best interest of the children when no children existed when the agreement was reached and will be vulnerable to scrutiny of the court. It is advisable if you intend to have children together that this is detailed in the pre-nuptial agreement and consideration given that the agreement will need to change if and when children come along;
- CHANGE IN CIRCUMSTANCES – it is difficult to predict the future and even with the best intentions, it is not possible to predict all future events that may crop up and may deem the agreement reached as ‘unfair’;
- REVIEW – A review clause should be included to cover any future events that may or may not crop up. This leave the certainty of the agreement unknown;
- UNROMANTIC – It is definitely a passion killer to embark on married life together and talk about what will and won’t happen should you separate;
- BAD TIMING – Weddings are stressful and expensive times anyway without broaching the subject of separation and legal fees;
- ALWAYS A WEAKER PARTY– There is always one party that is more vulnerable than the other and often clauses are agreed just so the wedding can go ahead, and the problem arises if separation occurs and realisation of signing the agreement hits the other party;
- CAN CAUSE FAMILY FEUDS – Broaching the need of a pre-nuptial agreement can cause upset amongst the family;
- UNNECESSARY LEGAL FEES – If the parties never split up, the agreement is unnecessary and a waste of time.
As detailed above, drafting a pre-nuptial agreement should not be taken lightly and it is important that before entering into a marriage both parties consider the need of a pre-nuptial agreement carefully. It is advisable, before broaching the subject with your loved one, to consider fully each point raised above.
At Consilia Legal we specialise in pre-nuptial agreements and offer a fixed fee for our services. We also offer a free initial consultation and we can go through the above advantages and disadvantages with you and help you decide if a pre-nuptial agreement is necessary.
As mediators we can also assist you and your partner in negotiating the terms of your pre-nuptial agreement to avoid the intervention of solicitors in negotiations and ensure that everyone is happy with the terms agreed.