InsightsInsight - Family and Divorce - POSTED: May 6 2020
Wealth protection upon marriage
Whilst the summer wedding season may be on hold due to the coronavirus outbreak, many couples are still excitedly planning for their special day; picking out favours, place-cards and centre pieces.
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Something that many couples often overlook, however, is the important matter of protecting assets in the unfortunate circumstances of relationship breakdown. This article provides clarity on what pre and post-nuptial agreements are, and the protection that they can provide.
Whilst it may be considered ‘unromantic’ to discuss relationship breakdown when planning a wedding, the reality is we live in a time when around 42% of marriages in England and Wales will sadly end in divorce.
Many people have heard of pre-nuptial agreements, but are not sure how they operate or what protection they might offer. Pre-nuptial agreements are not strictly binding upon the courts. However, when certain criteria are met, they will be given great weight by a court considering the division of assets upon divorce.
Examples of the criteria include both parties providing full financial disclosure to each other, the receipt of independent legal advice by both parties and the agreement being fully negotiated and signed at least 21 days in advance of the wedding. A helpful rule of thumb is to have agreed and signed the pre-nuptial agreement before the wedding invitations are sent.
It is this last ‘21 day’ point which often catches couples out and can prevent them from entering into an effective pre-nuptial agreement. However, what many people do not realise is that a pre-nuptial agreement is not the end of the story. If a couple have not managed to negotiate and settle a pre-nuptial agreement in enough time prior to their wedding, they can still enter into a similar agreement known as a post-nuptial agreement.
A post-nuptial agreement is negotiated in much the same way as a pre-nuptial one. It remains necessary for both parties to provide open and honest financial disclosure and to reach an agreement which is fair to them both in all the circumstances.
One advantage of negotiating nuptial agreements after a wedding is that, often, a party wanting to avoid a pre-nuptial agreement will claim that the other party ‘forced’ them to sign the agreement by threatening not to proceed with the marriage if it wasn’t signed.
Where negotiation takes place after the wedding this claim of duress is removed. Provided all other relevant criteria are met, it is likely that the agreement will be given more weight by a court than a pre-nuptial agreement might otherwise have been.
Post-nuptial agreements cannot only be utilised immediately after a wedding but can be entered into when one party to a marriage comes into wealth or assets from a third-party source. Examples of this include inheritance, or when parties have separated and wish to reconcile on their own terms.
Any nuptial agreement can be useful to those marrying for the second time, particularly when seeking to ensure that children of a first marriage are protected within the family legacy.
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