Protecting businesses with a pre nup

There is a common perception that premarital agreements are not legally binding. Ten years ago even I would have said pre marital agreements were not all that popular.  Speak to any family law practitioner today and they will be dealing with more pre marital agreements than ever before – whether in the context of drafting them or dealing with cases where one is in existence.   Whilst the court will ignore a pre marital agreement if it is unfair or unjust the trend in more recent high profile cases would suggest that they will now be given great weight in any future wrangling over finances upon divorce; if you are seeking to protect pre existing wealth – including a family business – it is far better to have one than not. 

Indeed why should two competent adults considering marriage and having been properly legally advised not themselves decide how they believe finances should be dealt with upon  a future separation to produce a fair result for them both?  In Charman v Charman – Court of Appeal the President of the Family Division commented, “If unlike the rest of Europe the property consequences of divorce are to be regulated by the principles of needs, compensation and sharing, should not the parties to the marriage…have at least the opportunity to order their own affairs otherwise by a nuptial contract?” As a result of a large number of cases over recent years courts will now be heavily influenced by a pre nup as long as it is freely entered into, both parties understand the implications and it is not significantly unfair to either party.  They have been described as a “factor of magnetic importance” 

In summary there is a groundswell of judicial opinion towards pre marital agreements becoming legally binding and they are now highly persuasive given satisfaction of a number of factors.  Whilst I have not seen a pre civil-partnership agreement tested in the courts, the approach should be the same.

That said would you want one?  It depends on your own personal circumstances.   If it is a second marriage you may wish to protect pre marital acquired assets from any future divorce.  You may wish to protect what you view as family wealth for your existing family (e.g. existing children).  This may particularly be the case where there is for example a family  business that has passed through generations on one side; or been set up pre marriage and where much of the “effort” in establishing it has been completed.  They will be well worth considering in circumstances where one or both parties to the marriage already have considerable wealth.

Various arguments can ensure about bargaining power – an agreement signed at the eleventh hour is likely to be given zero weight and the image of lawyers at the church door is not a happy one.  Preparing for a wedding is often stressful in itself – throw in negotiating a pre marital agreement and stress levels will inevitably be raised.  However a well thought out pre marital agreement entered into voluntarily, without undue influence or duress, with independent legal advice, material financial disclosure and proper provision for any children (or left open for the same) may well sway in your favour if things don’t work out.   By all accounts divorce should be the last thing on you mind as you’re walking up the aisle.  A pre marital agreement may take the romance out of marriage but serves as a useful framework for negotiations if things don’t work out.

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