Archive for the 'Prenuptial Agreements' Category

Clean break via a pre-nuptial agreement

The Financial Times recently reported that professionals in the City and those working abroad are increasingly turning to pre-nuptial agreements in order to protect the savings and investments generated from their labour. These “new money nuptials” are a contradistinction to the “old money nuptials” which typically look to ring-fence assets inherited on the death of parents, grandparents etc.

So are pre-nuptial agreements binding and are they worth the “hassle”? To help breakdown the issues, let’s work with the following common example.

Jeremy is a British citizen who is getting married to Jenny, an Australian national who was schooled in England. They both currently live and work in Qatar taking advantage of the more favourable tax system. Jeremy is a civil engineer and Jenny an English language teacher. They plan to continue living in Qatar after marriage but do intend to return to England to set up a family. There is a significant imbalance in assets. Jeremy has roughly £1,500,000 in assets, including equity in a house in Cheltenham and investments. Jenny has a few thousand pounds in savings. Neither party is likely to inherit any significant sums.

The current position on pre-nuptials in English law is that weight would be given to them in the event of a disagreement provided certain factors are met. Importantly, the agreement must be fair in the prevailing circumstances and accompanied by some important formalities i.e. independent legal advice, absence any duress (pressure) and typically they are signed at least 21 days before the wedding.

Many pre-nuptials seek to ring-fence assets accrued before the marriage, so in Jeremy’s case the properties and investments, with the agreement essentially providing that the couple will, the event of a divorce, share the wealth they have built together – what might be called the “fruits of the marriage”. However, it is highly recommended that the pre-nuptial is periodically reviewed – it is important that neither party will be left without financial provision, and any children will need to be properly provided for. Staying with the above example, if Jeremy and Jenny have daughter, Jessica, the pre-nuptial would need to altered on Jess’ birth to take her into account and make sure she is provided for. So while there may be a clean break between Jeremy and Jenny on divorce, it is not possible for a parent to get a clean break from a child and issues such as child maintenance will need to be considered.

In terms of their benefits, pre-nuptials offer the likes of Jeremy and Jenny the certainty of knowing what will happen in the event of a divorce. The fact they currently live in Qatar is not necessarily a “deal-breaker” – a clause can be entered into the agreement which provides that both parties agree at the outset that any later dispute will be dealt with by English courts applying English law. More than this though, given the cost of a prenuptial is significantly less than court proceedings post divorce it really does pay to discuss and draft a prenuptial.

Traditionally many people like to sit down with their solicitors and discuss matters, nowadays with Skype it is often possible to discuss matters via the web. Papers can be faxed and sent via email.

Please contact Rebecca Silcock if you have any questions relating to pre-nuptials.

Advertisements

Beware of the Prenups! A warning from the Aussies!

With the Law Commission considering the change of legislation providing for the validity of prenuptial agreements in the courts of England & Wales following the decision of the Supreme Court in Radmacher and Granatino http://bit.ly/pYtoKW last October, Australian lawyers are advising that they are shying away from drafting such agreements following a raft of insurance claims for negligence.

With more of us undertaking Prenup work following the Radmacher ruling it was interesting to hear Paul Doolan from Barkus Doolan Kelly based in Sydney address us at the International Academy of Matrimonial Lawyers (IAML) conference in Harrogate in September where he informed us that prenuptial agreements have been part of the Australian landscape for over ten years and cover the issues of property and spousal maintenance.

He stated that the Australian Courts had adopted a very strict approach to interpreting the agreements. Initially as a result of the mandatory language of the governing legislation, many agreements faced being
struck out through minor provisions being breached. The law was changed retrospectively to ensure that hundreds if not thousands of Agreements would not be declared as non-binding.

Far from reducing the number of applications to court, Paul said that there had been an increase in litigation in seeking to confirm whether or not they should be binding based upon some of these technicalities.
Lawyers are now considering very carefully whether or not they should take on such work as premiums for professional indemnity are increasing dramatically due to the potential for professional negligence claims.

The recent case of Wallace & Stelzer was brought before the Australian Court where the husband sought to challenge the Prenup on the basis that the agreement was flawed for various reasons of a technical nature but also that representations made by his wife that “she loved him, wanted to have children with him and wanted to live with him for the rest of her life” taken with other statements and modes of behaviour on her part were
evidence of fraud and unconscionability on her part.

The Judge ruled in favour of the wife and upheld the provision to provide $3.25m from the husband’s $16m assets.

With increasing couples marrying later in life with acquired assets or second time around, I continue to foresee an ongoing rise in instructions in this work. I am sure that with most European jurisdictions already recognising such agreements, England and Wales will follow suit.

No doubt today’s breaking news that the Duchess of Alba http://bbc.in/qOh2Xm at 85 is set to marry again will continue the debate as to whether she will have ensured that her £3bn wealth has been protected for the benefit of her children.


Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 428 other followers

Mogers Solicitors

Advertisements