Wedding bells or alarm bells? Making the case for nuptial agreements
6th March, 2018
They’re often seen as the staple of Hollywood celebrity unions, but nuptial agreements are a useful method by which any couple can set out financial arrangements prior to, or following their marriage.
It may seem unromantic to think about a future without your other half, but planning how to safeguard both your livelihoods – should the worst happen – can actually take away a lot of unnecessary worry and stress from a relationship.
That’s exactly what a nuptial agreement does – it allows a couple to agree how any assets will be divided upon a future separation and can be particularly useful for those who wish to protect existing wealth, or who are marrying for a second or third time. Forming an agreement in this manner provides an opportunity for the parties to consider how to divide assets without the added stress (and cost!) of an imminent divorce or separation.
When’s the best time to create a nuptial agreement?
Nuptial agreements may be formed prior to a marriage (a pre-nuptial agreement), or by an already married couple (a post-nuptial agreement). Equivalent provisions exist for civil partners. Nuptial agreements determine how marital assets will be divided between the parties upon divorce, and can also set out which assets are to be treated as non-marital assets. They may also set out how finances will be managed during marriage, such as responsibility for payment of outgoings.
A pre or post-nuptial agreement can also be a useful tool to protect an existing or prospective inheritance. Parents (or grandparents) may wish to protect their assets for the benefit of their children and prevent family wealth from being lost in future divorce proceedings. Likewise, if one party has inherited a sum from their own parents prior to, or during the marriage, the nuptial agreement could specify that these are to be treated as non-marital assets, and outside the scope of any division of the marital assets.
For business owners, protecting their business (as well as other shareholders, employees and customers) can be a good reason to consider a nuptial agreement. The agreement may serve to prevent shares being transferred to the other spouse, thus allowing the business owning spouse to retain control.
One size doesn’t fit all – nuptial agreements should be bespoke
Nuptial agreements are individually tailored to meet the particular needs of each couple. Without a nuptial agreement in longer marriages, the starting point of the court is to divide all marital assets equally. A nuptial agreement can form the basis of an alternative arrangement that better meets the needs and aspirations of the couple in question.
A nuptial agreement should at the very least provide for the needs of both spouses. Without addressing those needs then the agreement has much less likelihood of being invaded by a future court.
Are nuptial agreements completely binding?
Well as the law currently stands, not quite! Upon separation, any nuptial agreement entered into by the parties will be a factor that the Court will consider when dividing the matrimonial assets. The Court will give greater (possibly decisive) weight to an agreement that has been freely entered by the parties with a full appreciation of its implications. It is far better than having no agreement at all if your intention is to ring-fence wealth.
It is important to each seek independent legal advice when drawing up an agreement to ensure that it meets essential requirements and has the best chance of being upheld in the future.
As featured in the March 2018 issue of Cheshire Life
Legal 500 – The ‘outstanding’ Richard Barge heads the department at Aaron & Partners LLP. Barge is praised for his ‘exceptional knowledge’.
Chambers & Partners – Richard Barge advises on complicated finance cases, and is a skilled collaborative lawyer. One commentator says that he has “excellent knowledge and negotiation skills.”