Unfortunately, statistics show that more than one in three marriages will end in divorce. This means there is a high possibility that a person will marry more than once. As a result, couples require greater control over their financial assets. Parties would be advised to consider a pre-marital contract in a number of circumstances, including but not limited to:
- Where there is a substantial difference between the financial position of the parties;
- Where one has been married before;
- Where one’s family has contributed to the capital;
- Where one has a previous family for whom capital needs to be retained;
- Where one has assets they want to protect;
- Where the parties want a method to resolve the finances in the event of a separation.
Pre-marital contracts are entered into by agreement before marriage and attempt to set out what should happen to a couple’s finances upon divorce. They give an agreed structure for resolving finances and may prevent the need for court involvement. Pre-marital contracts are not automatically enforceable in England and Wales at the moment. However, recent cases make clear that prospective partners, entering into pre-marital contracts (or pre-nups) with their eyes wide open are likely to be held to them if they are found to be fair at the time of divorce. A Post-Nuptial Agreement is a contract drawn up after marriage or a couple have formed a civil partnership. The Agreement provides details on how the couple’s assets and property would be divided in the event of the couple divorcing, separating or upon death. A Post-Nuptial Agreement is similar to a Pre-Nuptial Agreement except that it is made after the marriage or civil partnership has taken place. A Post-Nuptial Agreement is a relatively new concept in the UK and only became legally binding in 2008 following a Privy Council judgment. Post-Nuptial Agreements can and often are enforced by the courts in a similar way to separation agreements. Before obtaining either a Pre-Nuptial or Post-Nuptial Agreement it is a good idea to discuss the matter, in depth with your spouse or partner. You will need to agree on how you will divide your assets and debts and take into consideration any future income. If you can agree on these matters it will make the whole process easier. A typical Pre-Nuptial and/or Post-Nuptial Agreement would typically include the following details:
- Assets and debts and how they should be dealt with
- Income and expectations of any gifts and / or inheritances
- Any future income or gains including property
- A list of personally and jointly owned belongings.
- What will be covered in your Will in the event of your death?
- How much maintenance will be paid to your ex-partner?
- How any property will be divided this would include second homes etc.
- Insurance including life, medical and disability
It is crucially important that both parties obtain independent legal advice from a solicitor. Normally both parties will need to instruct different firms of solicitors to avoid any conflict of interest.