It’s not an easy case of signing an agreement to say ‘I keep what’s mine and you keep what’s yours’ but in my experience that is often what people expect a pre-marriage agreement to do
With the Law Commission’s report on pre-nuptial agreements due to be published later this month, it looks more likely that pre-nups will become legally binding. However, as with all things to do with love and marriage, it’s not that simple.
I have no doubt that many wealthy individuals are putting off marrying – particularly in this country – because of justified fears of the way the courts in England deal with division of assets and maintenance on divorce. Why should people not be able to ‘contract out’ of their legal obligations to a spouse if they divorce?
It’s not an easy case of signing an agreement to say ‘I keep what’s mine and you keep what’s yours’ but in my experience that is often what people expect a pre-marriage agreement to do.
Consider these two examples: the wealthy widow marrying the impoverished divorced man both in their late fifties. He has little capital (because it all went to the first wife to house her and their children) and has not been earning much money since he lost his job. Second, the rich businessman who is marrying a younger woman who comes into their relationship with no capital and low earnings; their joint intention is to have a family soon.
Read more on prenups from Spear’s
Fast forward ten years and the marriages are on the rocks. If the husband in my first example is unwell and well over retirement age and the young woman in the second example is middle-aged with three young children, their positions would be untenable if they found themselves divorced with no money to house or support themselves.
It is for these reasons that there are still quite stringent safeguards built into the Law Commission’s proposals which will need to be adhered to if a pre-nuptial agreement is to be legally enforceable. For example, an agreement will still need to provide for basic ‘needs’ to be met on divorce (for housing and income); the rights of any children must not be prejudiced; and both parties will need to take their own legal advice and to give proper disclosure of their assets. An agreement should not be manifestly unfair and should not be entered into under duress.
So the good news is that binding agreements will bring more clarity and security (for the wealthy partner) but remember a pre-nuptial agreement is a legal contract and needs to be dealt with and negotiated properly and carefully. If you are wealthy, it is certainly better to have a marriage agreement in place.
But there is no getting away from the fact that insisting on a pre-nuptial agreement may be sensible but it is not romantic. If you set the date for the wedding and embark on the preparations it can be difficult to negotiate an agreement with the clock ticking. Remember that the financially weaker party may be given legal advice not to sign the agreement.
Ultimately, if terms cannot be agreed, you may need to be prepared to call off the wedding. The best way is to be quite clear that the marriage is dependent on a mutually acceptable agreement being negotiated before the date is set and the invitations sent out. But is that the most auspicious way to embark on married life?
Sarah Duckworth is a partner in the Family Department at Mundays LLP