Pre-Nuptial Agreements
Nothing can kill romance faster than the word pre-nup. But with about one in three of all first marriages ending in divorce, and 50 percent of second or third ones failing also, a pre-nup is smart financial planning.
Who should consider a pre-nup?
· You have assets such as a home, stocks or shares or retirement funds
· You own all or part of a business
· You may be receiving an inheritance
· You have children and/or grandchildren from a previous marriage
· One of you is much wealthier than the other
· One of you will be supporting the other through university or college
· You have loved ones who need to be taken care of, such as elderly parents
· You have or are pursuing a degree or qualification in a potentially lucrative
profession such as medicine
· You could see a big increase in income because your business is taking off,
or that garden shed band you play in has just signed a contract with a big
record company
Having a prenuptial agreement has many benefits, including:
· Protection of ‘family’ property and possessions intended to pass down through generations
· Protecting the needs of the children
· Protecting parties of different nationalities who hold assets in another country
· Helping those that are marrying for the second time
· Putting financial expectations on the table before the wedding
Approaching the subject
So how do you broach this delicate subject? First, do it as early as possible. The mention of a pre-nup shouldn't come as a surprise if you and your partner have been open with each other as the relationship became serious. Let your partner know that you believe that such agreements are important and you would like to talk about the subject.
The key ingredients of a solid pre-nup
Honesty Both parties must FULLY disclose their assets. If it turns out either person has hidden something, the pre-nup may well fail the scrutiny of the Court.
Signed in advance You can't present your intended with a pre-nup two days before the big day and say, "Would you mind signing this?." The document should be signed at least twenty-one days before the wedding to avoid the appearance of coercion, another key reason why some agreements are rendered null and void.
Fairness A valid pre-nup should be "fair". The Court will always perform an independent discretionary review of the arrangements upon divorce, and will seek to ensure fairness and that one spouse will not be left destitute.
Formality A pre-nup scribbled out on the back of an old envelope is unlikely to bind the parties, or pass the scrutiny of the Court.
Independent Legal Advice Beware the websites offering pre-nups for £50 without the need for a solicitor. A key ingredient is that both parties have been fully advised as to the terms and consequences of the pre-nup.
Difficult as it may be to talk about money before marriage, doing so can save much heartache and aggravation in the long run. A pre-nup can minimize the financial and emotional cost of a divorce.
Without a pre-nup, assets could end up in the hands of your spouse's children from a previous marriage instead of your own children, or they could go to an idle spouse who did very little while you toiled away at a career or enterprise that eventually became a big success.
If you don’t want the Court to make final decisions about the distribution of your assets upon divorce, a properly drafted pre-nup can help to protect you.