Pre and Post nuptial Agreements - An Insurance Policy?
The question often arises as to whether someone should enter into a Pre (or Post) Nuptial Agreement in relation to their marriage.
Clearly this is a personal decision and many will question whether to enter into an agreement undermines the basis of the relationship. Whilst those concerns may be valid the fact remains that many couples, for good reason, decide to enter into a Nuptial agreement in order to regulate and determine what will happen, normally to their finances, should their marriage breakdown.
Sometimes the parties are placed under pressure by other family members or business colleagues, especially when one party has an interest in a family trust, business or estate. Alternatively, one party may have been through a divorce before, possibly having children from that marriage, whom they wish to protect, financially, should this subsequent marriage fail. In addition someone who has built up substantial wealth or business interests may also wish to protect their finances.
The courts are increasingly prepared to recognise Nuptial Agreements, albeit the court still retain discretion as to whether to uphold the terms. There are certain guidelines in place, so for example the parties have to provide financial disclosure, receive independent legal advice and the formalities have to take place several weeks in advance of the proposed marriage date, so ensuring a party is not coerced into the agreement. A well drafted Agreement should also include provision for the document to be reviewed on a regular basis or upon the happening of certain events. The agreements have been likened to a contract between the parties.
Are they worth having? Generally, yes as even if, at a later date, the judge does not precisely follow the terms of the Agreement, the fact that the Agreement has been entered into by the parties will sway their decision. It might therefore be better to liken the Nuptial Agreement to an insurance agreement, namely a document which seeks to reduce or prevent a future claim. As with all insurance policies, they should be reviewed on a regular basis.
Even if the Nuptial Agreement is not fully followed it might reduce what might otherwise have been the claim as well as possibly simplifying the case, thereby reducing legal costs. If carefully drafted the Agreement could also be used to build up assets for the weaker (financial) party.
If you would like to discuss any of the issues raised in this article, or need any advice, please contact Stephen Smith or give us a call on 0345 070 6000.