The Increasing Importance of Pre-nuptial Agreements

Today, divorce is becoming increasingly commonplace and a prenuptial agreement drawn up can help prevent unpleasant surprises for either party in the event of divorce. This comes, in particular, where more couples are entering into marriage at an older age, having already accumulated assets and property independently from each other. The Office of National Statistics (ONS) reports average age at first marriage is now 31, compared with a 20th-century low of 23 in 1970.

Daniel Theron, a partner commented “A pre-nuptial agreement sets out how the assets of the marriage are to be divided and also any potential spousal maintenance should the marriage come to an end” Daniel further commented “when there is disparity between the assets or the earning capacity of the parties it is prudent to consider entering into a pre-nuptial agreement or pre-partnership agreement”

Other financial considerations are as follows:

• Protection of assets acquired prior to the marriage
• Protection of the financial interests of any children of the marriage and children of any previous marriages
• To prevent one party’s assets from being eroded by the debts of the other party
• To protect the assets of a business or trust
• To propose how your finances are managed between you

Pre-marital Assets

Assets acquired before marriage, unless protected with a pre-nuptial agreement, can be treated in the same way as assets of the marriage on divorce should the Court deem it necessary to do so. The non-marital assets of one spouse are not clearly defined in law.

Protection of the financial interests of children

Existing wills are revoked on marriage and any children of a previous marriage may not benefit from any inheritance you may plan to leave them if a new will is not drawn up after a second marriage. A pre-nuptial agreement can include a provision that both parties make wills and can also protect the financial interests of the children from your previous relationships by ensuring that certain assets are protected and are only for them.

Protection for your Spouse’s debts

If your spouse has accumulated debts in the event of divorce assets of the marriage can be applied to the debt. A pre-nuptial agreement can help prevent your assets being used to satisfy your spouse’s debt in the future.

A business or Trust

Trusts are increasingly being used to shelter assets and can be set up for various reasons, to protect inherited assets and wealth for future generations, including the children of a marriage, to manage tax, to provide an income or capital to certain beneficiaries. Including a trust in a pre-nuptial agreement protects against challenges.

Businesses, are considered part of the matrimonial assets regardless of whether the business was set up prior to the marriage. To protect the business and the other directors, shareholders and employees, a business should be included in a pre-nuptial agreement.

Pre-nuptial agreements are not legally binding but further to the landmark Supreme Court case of Radmacher –v- Granatino in 2010 the Court stated that certain requirements had been fulfilled as follows:

• a pre-nuptial agreement had been freely entered into with no undue influence and a full understanding of the implications of the agreement
• a reasonable length of time to consider the implications of the agreement
• it had been signed 28 days before the marriage
• full financial disclosure had been made by both parties
• legal advice had been sought
• the agreement must be able to be enforced as a contract
• the agreement must be executed as a deed
• the agreement must meet the needs of the financially weaker party and the needs of any children of the marriage

Daniel Theron, advises on litigation in family law, employment, cross-border debt recovery and defamation. Daniel has considerable expertise in contentious cross-border family law, including complex financial arrangements and enjoys a high level of success in both debt recovery and employment law. 

Daniel enjoys a reputation for being meticulous in his analysis of the merits of a matter and tenacious in his pursuit of a successful outcome for clients. He frequently impressively navigates challenging situations culminating in an excellent level of achievement, in excess of all expectations.

If you would like to know more about pre-nuptial agreements please contact Daniel’s clerk Sam Groom at SG@giambronelaw.com or please click here.