Pre-nuptial agreements – the facts
8th January, 2014
Family Law Specialist Sarah Crilly espouses the need for pre-nuptial agreements for anyone in business and planning to marry.
It’s January and the national papers have already completed their usual annual press release that this is the busiest time for divorce instructions for family lawyers. The statistics are sobering: one in three marriages will end in divorce and only 33% to 40% of second marriages will survive. On average, a marriage in Britain lasts only 11 years. For second marriages these tend to end within the first five years.
Nearly two-thirds of those divorces now end with the family wealth evenly split between Husband and Wife. Equality has become the guiding principle for settlement, even more so where there are significant assets involved.
Here is a summary of the value of pre-nuptial agreements:
Q. What is a pre-nuptial agreement?
A. It is a contract entered in to by a couple prior to marriage which sets out how they intend to regulate their financial positions in the event of a divorce
Q. Why should couples enter into these contracts?
A. Currently the court has a wide discretion on how to deal with the division of assets between a divorcing couple. The Court’s only guidance is a few Supreme Court rulings and a checklist of factors contained in legislation, namely, The Matrimonial Causes Act 1973.
The cases focus on treating parties equally and only departing from that principle in certain specific circumstances. The legislation asks that the court consider the length of the marriage, the parties’ ages and resources, standard of living, income and earning capacity amongst other matters.
It’s very easy for different Judges to come to a different solution on the same set of facts, which means for parties getting divorced the outcome is uncertain.
Rather than leave the division to the court, a pre-nuptial agreement will give the parties certainty and is a sensible form of wealth protection. It will also reduce legal fees as the issues for the court will be clearer and narrower. The average cost of ending a marriage through the courts is £13,100 and that tends to be the small asset cases.
Q. Will a court follow the pre-nup?
A. Although they are not automatically binding on the court, provided it is entered into fairly and both parties have had the opportunity to consult a lawyer before signing it, the Supreme Court has ruled that pre-nups should be upheld and only departed from in limited circumstances.
Q. Are Pre-nuptial agreements aimed at the super wealthy?
A. Certainly not. Pre-nuptial agreements benefit anyone with assets that need to be divided after a divorce. Of course, there are cases where one or both parties are in business and this can bring additional complexities to the case or their affairs may be tied up with a Trust or Farm but all couples can benefit from a pre-nuptial agreement.
Couples do end up in court on some of the most uncomplicated cases where they may just be arguing over the split of equity in a house. They still have to fund the costs of the court proceedings and the stresses of litigation are exactly the same no matter how simple or complex their assets.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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