Marriage is a wonderful thing. Committing yourself to another person is likely to be the most important day of your life. Gathering together with family and friends to seal a union and celebrate, will live long in the memory. But modern marriages, or civil partnerships for some, are complicated. The UK divorce rate is estimated at around 42% and it is not unusual to come across people who have married several times during their life. And getting married young is no longer as common as it was in the past. Times have changed and this brings with it new challenges.
The outcome of these cultural shifts, is that many people will now enter into a marriage with significant financial assets behind them. You may have independently built up a business before you get married or have significant savings and investments behind you. While marriage is ultimately about sharing your life with another person, the question of how to treat the wealth you have acquired previously needs to be addressed. Leaving these things to chance could be a costly mistake and jeopardise your financial future.
What is a prenup?
Prenuptial agreements, or prenups, can provide a useful solution. These arrangements allow partners to formalise how assets would be split in the event of a separation. If you think it makes sense that you should both keep what you came into the marriage with, then you can tailor an agreement to facilitate that. Without a prenup, courts generally split assets generated during a relationship down the middle in the event of a divorce. This may be something you are happy to do, but it is important you enter into the marriage knowing this will potentially be the outcome following a separation.
An important point to consider with prenups is that they are not legally binding in English courts. They can, however, be influential and upheld if they are considered fair and entered into freely, according to law firm Expatriate Law. This should be taken into consideration when devising a prenup as an unfair agreement which does not meet one of the party’s needs is unlikely to be upheld. The highly discretionary nature of English family law gives judges a lot of scope to find solutions that are fair in all the circumstances of the case..
A thorough prenup should be thought of as part of your overall financial planning arrangement. Your long-term financial security is dependent on preparing for all eventualities, and however much you would prefer not to think about it, divorce is something that can happen. If you do find yourself heading for a split, you will ultimately be glad you took the time to plan for it and avoided the uncertainty and negotiation that comes with deciding how to divide assets. It is also possible to have a postnuptial agreement, or postnup, which is the same as a prenup but created during your marriage.
Handle with care
While pre-nups are regularly entered into by European couple, there is still something of a stigma about them in England. Law firms provide some useful tips on how to approach talking about a prenup with your future husband or wife. These include introducing the idea early and referring to friends with similar arrangements as examples. It is also advisable to be clear and focus on fairness. Covering the costs of the prenup if you are the financially stronger partner could also help things run smoothly.
Ideally, you’ll never have to turn to your prenup. It is best thought of as an insurance policy against a scenario you never intend to face. Divorce can be extremely difficult both emotionally and financially. Discussing a prenup may be the last thing on your mind in the months running up to your marriage. But if you make the effort to talk about it and come to a reasonable agreement, it may end up being the smartest conversation you ever have.
At London & Capital, our experienced advisers are used to dealing with the sensitivities around financial security both inside and outside of marriage. Your peace of mind is important to us and we want to help you achieve it, whatever the future holds