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Should you say ‘I do’ to a pre-nup?

21 March 2017

11:58 AM

21 March 2017

11:58 AM

‘I think pre-nups are brilliant,’ Catherine Zeta Jones told Vanity Fair back in 2000, shortly after marrying Hollywood royalty Michael Douglas. ‘If I were marrying someone of lesser fortune who was 25 years younger, I’d be doing exactly the same thing. Why should Michael be in a position where half of his fortune, which he’s worked bloody hard for, lands in someone else’s lap?’

Unfortunately for some brides, grooms and their families, such pragmatism is rare. After all, when you’re in the heat of wedding planning, as many are at this time of year, the thought of it all ending in court is hardly romantic.

Yet it’s clear there’s a demand for pre-nuptial agreements (PNAs), designed to provide a level of certainty around financial arrangements if things go wrong. These agreements also establish some protection of assets, inheritance and existing family commitments, such as children from previous marriages.

Though PNAs are not legally binding in the UK they are among the factors judges look at when considering finances on divorce. Agreements can be ignored, or they can be partially or fully upheld if the terms make reasonable financial provision for parties and their children.

 

PNAs can be an attractive option if one party in particular is bringing wealth to a pairing, though some families can’t face up to this until the eleventh hour. Gavin Scott, managing partner at the London office of Stowe Family Law, says he’s seen scenarios where the pre-nup is only finalised the day before the wedding.

But if you’re worried about your new spouse, or perhaps your new son or daughter-in-law, walking away with the family silver if things don’t work out, then starting the conversation on a PNA needs to happen sooner rather than later.

‘Leaving it to the last-minute means rushing around and creating stress around dealing with the provisions of the PNA, especially where there is a dispute,’ said Scott. ‘The major issue is, the closer the wedding is, the more of an arm twist the PNA becomes. It may feel like a case of “sign this or we’re not getting married”. That kind of duress could help the pressured party get out of the PNA when it comes to relying on it in divorce, though as a rule I always advise clients not to sign something they are not prepared to be bound by in the future.’

He goes on to say that around half of the enquiries his firm receives for PNAs are for weddings in one to three months’ time. He wonders if people view PNAs as simple agreements that can be drawn up quickly, when in reality a properly drafted PNA requires a good amount of back-and-forth between parties. The agreement should take a full and proper account of the financial resources and what may happen in future years. Scott says a barrister should be involved in the advice and even drafting of the PNA. A more realistic lead time would be six to eight months. Costs start from around £1,000 and can increase to more than £10,000 plus VAT, depending on the level of complexity.

So, what if you’re the poorer party? Should you sign? Legal advice is essential. Scott provides this cautionary tale: ‘I advised one client who presented me with a PNA drafted by her husband-to-be. I advised her not to sign it as the provisions to her on breakdown of the marriage were not the slightest bit reasonable and her needs would definitely not be met. I didn’t hear from her again until after the marriage when she came in for a divorce.  Fortunately, she took my advice and didn’t sign the PNA.’

There is cause for cheer among what could prove to be difficult conversations with loved ones. The most recent Office for National Statistics figures show that for those marrying since 2000, there’s some evidence of a fall in the proportion of marriages ending in divorce. With any luck, like Catherine Zeta Jones and Michael Douglas, fewer couples signing pre-nups this wedding season will ever have to call on them.

Helen Monks Takhar is a freelance financial writer


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