At risk of being called unromantic, as we reach another Valentine’s Day, we’re looking at prenuptial agreements!
Many couples will celebrate 14 February with a proposal; we wish them every happiness and hope that their marriages are long and successful. But should they take precautions in case they aren’t? According to a survey of 1,600 members of the American Academy of Matrimonial Lawyers the number of millennials securing pre-nuptial agreements (“pre-nups”) to protect money they have not yet made from start-ups has risen significantly; “Members of the millennial generation are particularly choosing pre-nups as the best option to cover separate property holdings, business interests, anticipated family inheritances and potential alimony claims”
It needs to be borne in mind that prenuptial agreements don’t have the same status in England and Wales as they do in the USA. There’s no doubt that more and more people are considering these agreements as part of their preparations for their marriage. It may be seen as a rather brutal step to take but in reality it’s not much different from taking out insurance in case it rains on your wedding day: you very much hope it won’t happen, but want to be prepared for the possibility.
For some, as highlighted by the US survey, the issue is young people who want to protect the assets they’re in the process of building. Others however may be embarking on a second marriage where they’ve built up their assets over many years and want to ensure they can pass them down to their own families and preserve the wealth they’ve accrued long before they began their present relationship.
Increasingly the idea of a prenuptial agreement is prompted by parents who are anxious to preserve family wealth. Here at Stokes Partners our specialist family solicitors look at prevention as well as cure. If you’re a wealthy family with assets accrued over many years it undoubtedly makes sense to talk about a prenuptial agreement when one of your children marries rather than risk significant financial losses if the marriage doesn’t work. Farming families where the farm has passed down through the generations should also consider prenuptial agreements to protect the farm and keep it for the generations to come.
So are prenuptial agreements guaranteed to be legally binding? We still don’t have that certainty here. That doesn’t mean they’re a waste of money, however, because if prepared correctly they are likely to be upheld provided the court is satisfied that they’re fair in the circumstances of the case.
It’s essential that both parties have independent legal advice so that they understand what rights they are taking on and giving up. It’s also essential for each party to give full and frank disclosure of their finances to ensure that they each know what the overall assets of the marriage may be. It’s a good idea to provide for reviews of the agreement, perhaps at set intervals or perhaps in the event of children being born to ensure that if there’s a change of circumstances that might merit amending the agreement, there is a built in provision for that to happen.
Finally, make sure the pre-nup isn’t too close to the wedding! Getting it signed the night before the ceremony puts you at real risk of an argument that it was only signed to ensure that the wedding actually happened!
The more realistic and fair your agreement, the more likelihood you have of it being upheld if your marriage breaks down and the agreement is challenged. Providing specialist and expert advice on a prenuptial agreement whether we’re drafting it or advising on an agreement already drafted will undoubtedly have costs implications and given the potential importance of such an agreement it’s certainly not a case where it’s a good idea to get it done as cheaply as possible. There’s no doubt, however, that the cost of contested court proceedings in the event of a marriage breakdown will be many times more than the preparation of any prenuptial agreement!
From all of us at Stokes Partners, we hope that Valentine’s Day brings you all you’ve hoped for whether it’s roses and champagne, chocolates or diamonds. And if February 15 sees you starting to plan your wedding, why not come and talk to a member of our expert and experienced family team about whether you should add making a prenuptial agreement to your to-do list!