There can be little doubt that a pre-nuptial agreement is the very antithesis of romantic gesture. Not for the faint-hearted are the words ‘I love you but if we divorce I don’t want to share with you’.
Nevertheless wealthy families, especially farming families, would be wise to take a deep breath and utter those unappealing words. Farmers often expect that their assets will pass through the generations, providing a living from the land for those who follow. Many farming families use discretionary trusts as a method of tying up assets but trusts alone will not necessarily stop an attack on the assets if there is a divorce. A court is entitled to examine in detail the potential for payments being made out of the trust to meet the cost of the departing spouse’s settlement. Children up the ante further. By law their needs are paramount, this will include housing and income needs.
Pre-nuptial agreements have not caught on in a major way in East Anglia but in the City they are commonplace. However farming families would be wise to consider the consequence of a marriage breaking down and the implications for the family and arrange for the marrying party to enter into a pre-nuptial agreement in advance of the marriage taking place.
Many European countries treat pre-nuptial agreements as binding and leave no lee-way for discretion on divorce. In England and Wales this has not been the case, judges have retained the discretion to discard the terms of pre-nuptial agreements. The court still has that discretion but a Supreme Court case in 2010 gave pre-nuptial agreements added weight on divorce provided certain requirements were met. These pre-requisites are not difficult to meet, provided the parties consult lawyers well in advance of their marriage.
This then leaves the court on divorce only to consider whether the parties’ circumstances have changed to such an extent that the pre-nuptial agreement is neither fair nor appropriate. The party wishing to have the agreement upheld, need no longer show why it should be upheld, instead the party wishing to avoid it must show why it should not be upheld. This might seem a matter of semantics but is an important turnabout so far as the law is concerned.
The unappealing nature of a pre-nuptial agreement is probably the reason why many marriages are entered into without the idea being pursued. It is not necessarily too late to do anything about it after the marriage, although it may be tricky to persuade a spouse to give up rights after the event. An agreement entered into after marriage, known as a post-nuptial agreement, is considered influential on divorce, again provided the necessary pre-requisites have been observed.
Nicola Furmston is a partner at Ipswich based Barker Gotelee and specialises in family law and mediation.
The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.
Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk
Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.
Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority. FCA No. 408210