Should I get a pre-nup?
Tue 31 Jan 2017
Q. I am getting married and my friend has told me to get a pre-nup as I have property and a business of significant value. What is the point as I did not think pre-nups were binding in this country? My fiancée and I plan to live in the property I inherited from my parents but she understands that if we divorce that property will remain mine. I am going to keep it in my sole name. I also intend to employ my fiancée to handle the PR for my business but she will not be given any shares or directors rights. Is that not sufficient?
The starting point, if your marriage were to end in divorce, would be a 50/50 split of the “matrimonial pot”. The pot will consist of all assets and liabilities in your joint names as well as those in either of your sole names. This would include your business interests and property interests.
While you may be able to argue that your property interests and business assets were pre-acquired before the marriage and therefore should not be included in the matrimonial pot to be equally divided, the burden is on you to prove this which can involve lengthy, costly and acrimonious litigation if your spouse objects to this. Whilst on the surface this may seem a simple fight to have, the reality is that you may “mix” the pre-acquired wealth with matrimonial property. For example, you have confirmed that your inherited property is going to become your matrimonial home, your spouse is going to be employed by your company/business, and the pair of you are going to be living off the income from this business throughout your marriage.
As well as arguing over which assets are and which are not matrimonial, if you were to divorce you would need to divert the case from one based on sharing the assets (the presumption) to one based on your spouse’s reasonable needs. If you were successful in diverting the case given your pre-acquired wealth and unmatched contribution to the families wealth, your case would then be based on your spouse’s reasonable needs generously interpreted against the standard of living you enjoyed during the marriage looking at your family home, the financial support you awarded your spouse throughout the marriage, the cars you drove and holidays you enjoyed etc. This would need to be agreed between you or, in default, assessed by a judge after lengthy and costly litigation.
As you can see, it is far from straightforward. In order to prevent the above presumptions and battles, I would advise you to have a pre-nuptial agreement. The agreement can cover everything and be thoroughly specific about what is and is not matrimonial property, the division of all property in the event of a separation and can define now what both parties agree would be your spouse’s reasonable needs in the event of a separation. This is likely to be far more reasonable - particularly from your spouse’s perspective – than it would be after years of marriage and increasing expectations.
Alternatively, the agreement can cover some of these points depending on what you wish the agreement to cover. You can be creative and flexible with the agreement depending on your circumstances.
The discussions regarding the content of the agreement are had openly with each other and with the full knowledge of each other’s wealth and financial circumstances, however, the disclosure process is not as intrusive as it would be in financial remedy proceedings (which a pre-nup would hope to prevent). You and your fiancée would then each take independent legal advice on the agreement to ensure that you fully understood the terms and the provisions that you were contracting into.
Whilst a pre-nup cannot oust the jurisdiction of the court or prevent your fiancée later issuing proceedings for financial remedy, any court hearing such an application would need to give weight to the pre-nup, the terms of which they are now bound to follow if both parties received independent legal advice, gave full disclosure of their financial circumstances, and the terms of the pre-nup made suitable/reasonable provisions for your spouse to ensure they were not left destitute.
For me, the reason I would sign up to a pre-nup is to protect against a short marriage. After 10 plus years of marriage, you may feel that your spouse deserves a larger financial settlement than say after 1 to 2 years. Your greatest risk lies with the financial support you will be giving your spouse and the sharing of your property making it your family home right from the start. You are immediately creating a financial dependency and increasing your fiancée’s potential entitlement that you could curtail with a pre-nup.
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