Pre-nuptial agreements: rise of the pre-nup
Pre-nuptial agreements are becoming more commonplace among normal people. So who needs one and what will it cost?
Thought pre-nuptial agreements - or pre-nups for short - were just for celebrities? Think again. Lawyers have reported that humble farmers and entrepreneurs are among those fuelling a dramatic rise in those safeguarding wealth before marriage.
What is a pre-nup?
A pre-nup is a legal contract signed by couple at least six weeks before their wedding. It sets out how their assets will be divided if they divorce. It can also state general principles about how they would approach a split.
For example, a pre-nup could state that both parties keep their pre-existing properties but split any assets acquired after the marriage.
Pre-nups have traditionally been used by the super-wealthy who want to avoid handing over half their money if the marriage breaks down. Britney Spears famously avoided losing a hefty chunk of her £65 million fortune when she divorced Kevin Federline after two years of marriage. The reason? She had safeguarded her global business empire with an iron-clad 60-page pre-nup.
But they are increasingly being used by ordinary people with more modest savings or property, particularly those who want to protect their home.
Who needs a pre-nup?
Two youngsters with no assets can probably embark on married live without a pre-nup.
But more of us are tying the knot at an older age - according to latest figures from the Office for National Statistics, the average age that we exchange our vows in 36.2 for men and 33.6 for women.
By that age, when they may have established a business or wealth, and perhaps have children from a previous relationship, there is a greater need to ring-fence assets.
If a couple are about buy a home together and one contributes more than the other to the deposit, this money could also be safeguarded by a pre-nup. Lawyers say that parents who gift money to a child are increasingly insisting that a pre-nup is signed if the money is to be used to buy a marital home.
There are other reasons for drawing up the paperwork as well.
The recent increase in the price of farmland means that more farmers are signing pre-nups to avoid selling the land - which could be part of the marital home - as part of a divorce settlement.
And entrepreneurs are also insisting that their future spouse signs away any right to the business. This applies even to start-ups, where businessmen believe their business will increase in value throughout their marriage.
But are pre-nups legally binding?
No. Under the law in England and Wales, a pre-nup does not bind the Court as to what should happen in a divorce. However, Courts are increasingly attaching more importance to pre-nups, as long as they are fair and properly entered into.
Back in 2010 pre-nups were given a legal boost by the highly publicised divorce of Katrin Radmacher, the £100 million German heiress.
The UK Supreme Court ruled that ‘decisive weight’ should be given to the agreement signed by Nicolas Granatino, her former husband, before they married that he would make no claims on her fortune. Mr Granatino had tried to contest the pre-nup, saying he did not realise how wealthy his wife was when they married.
It is imperative that a bride and groom getting a pre-nup both seek legal advice and be clear about each other’s finances. There can be no suggestion that anyone was pressured to sign the pre-nup, or didn’t understand it, otherwise this could weaken the validity the document.
It is also worth saying that the longer the marriage, particularly if children have been born, the less weight a pre-nup holds. This is because a Court’s most important consideration will always be provision for any children. A pre-nup in the case of, say, a twenty-year marriage has never been tested in the UK.
However, couples can always amend their agreements according to their changing wealth and circumstances under documents known as ‘relationship agreements'.
How much does a pre-nup cost?
Unsurprisingly, as lawyers are involved, pre-nups don’t come cheap.
Depending on the circumstances, you can expect a lawyer to take around three to four hours to complete the paperwork in a straightforward case. They can charge anything from £200 an hour, meaning you are looking at more than £800 just to get the document drawn up.
Then the other party must seek legal advice and get another lawyer to check the paperwork, which is likely to incur several more hours of work.
Any extra communication with lawyers such as phone calls, letters and even emails will usually cost you more. Remember to factor all these costs in when choosing a lawyer.
Do you have a pre-nup? Would you ever get one? Let us know what you think in the comments section below.
More on divorce and your money:
The insurance that protects you against divorce
How to get divorced cheaply
How a divorce affects your mortgage
Divorce: Your rights to your money
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Comments
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My first reaction: Horrible idea. On the other hand, I am 45 and not yet married; and I have recently started dating a woman who is considerably less well-off than I am, so maybe... I hope we won't make the mistake of getting married without really understanding what it will mean to be tied to the other for ever, though. Actually, what I think is needed is a complete overhaul of the laws surrounding marriage and divorce. Divorce law shouldn't assume that everything is split down the middle if the two partners don't bring equal wealth. Marriage law shouldn't assume that there is no such thing as divorce. While it can be very romantic to take vows "till death us do part", few people nowadays give real thought to what it means. (I agree with moli on that one.) There need to be more options - fixed term contracts, contracts without economic union, and so on. But one thing I do think the courts get right: the interests of the offspring come first in a divorce. That's not to say that the courts don't need better ways of assessing what the interests of the offspring are, of course...
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Marriage is an economic partnership between 2 peaple and should remain so. Having been through a divorce (clean break option) is the best way forward, if a pre-nup does exist would further complications arrise when the love has gone and the other party reflects on the thought process before marriage...the divorce arguments then go on for years In the UK a court can disregard a pre-nup if its un-fair or if the two parties have simply argued so much about the content.
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Absolutely the right thing to do. Marriage is a "legally" binding institution. The law needs to have its stance and boundaries defined. marriage should not be entered into without a full understanding of its implications. I believe schools have a duty to prepare youngsters for life when they leave school so they have a duty to teach them about marriage and divorce as the two are linked. As any other legal contract such as a business it is a huge part of everybody s life and at present it is not being handled correctly. Every parent wants to protect their child from harm and be sure they go through life without harm, so why are adults so blind when they sign a marriage contract ? It would assist the whole of society and the courts if couples knew what they were actually getting into. Of course a contract can be broken but the consequences at present are inadequately dealt with (by a judge - who would be more useful dealing with crime) prepare couples for reality and society would be a better place. Marriage is a contract and needs clear stipulations instead of society wading through complications for years. Divorce does exist and it must be prepared for. Bolting the door after the horse has bolted is a waste of time , money and emotions.
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02 July 2012