Keeping it in the family; post-nups

Samuel Johnson described second marriages as “a triumph of hope over experience”.  We all know that divorce can be painful and expensive.  Almost one in two marriages fail, which means divorce affects us all.  In recent years London has become known as the “divorce capital of the world” because of a string of huge settlements.   Yet whilst the marriage rate is falling, there are more second (and third) marriages.  There are ways to protect your wider family, whilst still looking for a happy marriage.

Often the most stressful part of divorce is resolving financial arrangements.  Sadly, arguments about money can bring out the worst in people.  Here at bbl family law in Norwich all our solicitors are member of Resolution, an organisation of family lawyers who are committed to taking a constructive approach to divorce.

The number of people who remarry is steadily increasing, with approximately two fifths of marriages involving someone who has already been married before.   If you marry later in life, the chances are that you and your future spouse already have children, who may be adults themselves.  You are likely to be settled in your career, or might be retired.   You may have your own home, own savings and pension.  What happens if the new relationship doesn’t work?  Will your new spouse be entitled to a share of your wealth, or will you be able to leave it to your children?  English law does not automatically exclude “pre owned assets” on divorce, so the courts can redistribute anything you or your partner own if you divorce.

One way to take control over these questions is to have a pre-nuptial agreement, or ‘pre-nup’.  These are widely used in America and across Europe, but are less common in England.   A pre-nup sets out what happens to your house and savings if your relationship ends.  This can help avoid messy and expensive court battles over who gets what.  If you are already married, you can sign a post-nup, which is essentially the same thing, but completed after a marriage instead of beforehand (the risk is that your spouse might refuse to sign a  post-nup leaving you with very few options!).

For many years, the English courts refused to recognise pre-nups.  The main reason being that they undermine marriage – we shouldn’t enter into marriage thinking it might not work.  But this doesn’t sit comfortably with the reality of the modern world and it’s high divorce rate.  Perhaps pre-nups can help lower the divorce rate, by forcing people to think seriously about the impact of marriage, and divorce.

Recently the courts have handed down decisions which have strengthened the role of pre-nups.  The courts have given a clear indication that consenting adults should be allowed to regulate their own affairs, and that Parliament should legislate for this.

Another issue affecting the more mature, is passing wealth on to the next generation.  With a view to avoiding inheritance tax, you may want to give your children some of your assets or savings. What happens if they divorce? Will their spouse be entitled to a share of the gift?

The problem of course is that pre-nups aren’t particularly romantic.  Peter Baughan says “I’ve seen so many clients who regret not having a pre-nup.  It’s a cultural thing – it’s the norm in some parts of the world to have a pre-nup, but here it’s seems to be thought of as vulgar to talk about money.  Perhaps this attitude will change as the law develops, allowing people to make their own agreements, and people become fed up with the potential expense and uncertainty of litigation”.

Parliament still hasn’t legislated to make pre nups binding, so for the time being, we have caselaw, which applies general principles. The guidance is form a string of slightly contradictory cases.  The main requirements are that:

  1. It must be broadly fair.
  2. It must be signed well before the wedding (the guidelines suggest at least 21 days).
  3. Both people must give full information about their finances to the other.
  4. They each take separate legal advice, so both parties must see their own lawyer.

Please feel free to call any of us here at bbl to discuss pre-nups.