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When ‘I do’ becomes ‘I don’t’ - Protecting your assets pre and post nuptials
As the summer wedding season approaches, while much thought will inevitably be spent planning those finer details – favours, place cards, centre pieces – people often overlook the perhaps more important matter of asset protection and retention in the face of a relationship breakdown. Whilst it may be considered ‘unromantic’ to even discuss relationship breakdown when planning what should be a joyous occasion, the reality is we live in a time where around 42% of marriages in England and Wales will end in divorce.
Many people in the farming community will have heard of a pre-nuptial agreement and how this might be employed to assist in protecting pre-acquired business assets, which have often been built up over a number of generations. Whilst pre-nuptial agreements are not strictly binding upon the Courts, when certain criteria are met, they will be given great weight by a Court considering the division of assets upon divorce. Examples of these criteria include:
- both parties providing full financial disclosure to each other;
- the receipt of independent legal advice for both parties; and,
- the agreement being fully negotiated and signed at least 21 days in advance of the wedding.
In fact, a helpful rule of thumb is to have agreed and signed the document before the wedding invitations are sent.
It is this last ‘21 day’ point which often catches couples out and can preclude 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 good 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 and it remains incumbent upon parties to provide open and honest financial disclosure and to reach an agreement which is fair to them both in all the circumstances. One particular advantage of negotiating agreements after a wedding is that, often, a party trying to renege on a pre-nuptial agreement will claim that the other party ‘forced’ them to sign the agreement by providing an ultimatum; “Sign the pre-nup or I won’t marry you”. Where negotiation takes place after the wedding this claim of duress is removed and, provided all the 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, they can be entered into when one party to the marriage comes into wealth or assets from a third party source, such as an inheritance, or when parties have separated and wish to reconcile on their own terms. Any nuptial agreement can be useful to those marrying for a second time, particularly when seeking to ensure that children of a first marriage are protected within the family legacy. This consideration is particularly relevant to individuals in the agricultural sector who may wish to ring-fence shareholdings in family farming business and assets.
For further guidance and advice on Pre and Post-nuptial agreements contact our Family and Divorce team.
This article was first published in the June edition of South East Farmer.
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