Those with considerable personal wealth, whether it has accumulated over time due to business interests, is linked to family assets, or has been gifted to them as an inheritance, should not feel uncomfortable about taking the necessary steps to protect it before entering into a marriage.
Pre-nuptial agreements can certainly be difficult to talk about in the context of a happy relationship that neither party can see going wrong, but when it comes to the protection of sizeable assets, they need to be discussed – and no more so than in situations where there are blended family units, or particularly complex situations.
The traditional family unit, which forms the backbone of most families, has been slowly going out of fashion, replaced with stepfathers, stepmothers, half siblings, second and third marriages, and situations where it might be best for a child to be raised by other members of their wider family rather than their biological parents.
This means that the distribution of wealth and assets can be particularly difficult to deal with – in many families, there isn’t a simple inheritance line from parent to children. Clear pre-nuptial agreements can help to ensure everybody knows where they stand should a relationship break down, and can help to avoid disputes between children from different relationships, ex-spouses and others.
Pre-nuptial agreements are of great benefit to parties with pre-acquired wealth, in all sorts of circumstances. One of the main reasons people look into pre-nups is if they have property, savings or pension acquired during a previous marriage or separately, and they wish to prevent their new spouse benefiting from those if that marriage were to breakdown.
Soon-to-be spouses may have assets that were given as a gift from family members, perhaps a chunk of money to use towards getting on the property ladder, and they may wish to protect this from their new spouse should a marriage dissolve. Sometimes it’s the parents who made the cash gift who may not want their offspring’s spouse to benefit from it in the event of a breakdown. There may also be children from previous relationships and a spouse may want to protect pre-acquired assets for the benefit of their biological children, and to ensure assets do not pass to stepchildren or others.
Pre-nuptial agreements are essential for any individual with a high-net worth who:
- is entering into a marriage that isn’t their first;
- is entering into a legally recognised relationship with someone who has children from a previous relationship;
- has children from a previous relationship and is entering into a blended family with a new partner and their children
- runs a family business and wishes to keep it and its assets within their family structure.
The structure of pre-nuptial agreements
There is no one-size-fits-all approach to the protection of assets before marriage – each agreement is bespoke and completely tailored to the individual circumstances of those getting married.
In most cases, an inventory of assets will be made, and how the assets should be dealt with should the marriage fail will be clearly set out. In many cases, there will be assets on the inventory which will always belong to one partner – these could be properties, cash gifts, or shares.
Any pre-nuptial agreement must be entered into voluntarily, with both parties obtaining independent legal advice, preferably at least a month prior to the wedding. There must be full and frank disclosure of all assets at the time the agreement was made and it must be fair and reasonable, otherwise it’s unlikely that a judge will rely on it during a hearing.
Sometimes pre-nups contain firm plans about the financial arrangements for any children involved in a relationship should a couple divorce. In cases of blended families or complicated set ups, there may be different provisions for biological children and stepchildren – it all depends on the preferences of each spouse. Having said this, it is very unlikely that any court would enforce any pre-nup provisions that could be deemed harmful to a child.
The legalities of pre-nuptial agreements
Pre-nuptial agreements are not strictly enforceable or legally binding – decisions are made at the discretion of a judge who has the power to redistribute assets and wealth if they think it is appropriate.
Despite this, we still strongly recommend the use of pre-nups. Even though agreements are not legally binding, they will be used as a key document during cases, and they will be comprehensively consulted by a judge.
Ongoing consultation over the legality of pre-nups also means that they could soon be a legally binding document, making it even more essential to have one in place before a marriage.
Tracey Miller Family Law is a specialist firm practising all aspects of family law, including divorce, cohabitation and pre-nuptial agreements. To find out more about TMFL, visit www.traceymillerfamilylaw.co.uk