Pre-nups – are they worth the paper they’re written on?
It was once the case that pre-nuptial agreements were the preserve of the rich and famous – but these days, they’re an increasingly common choice for couples preparing to tie the knot.
Although in English law they’re not legally binding, pre-nups are still influential documents that can have a significant impact on a divorce settlement.
The point was illustrated in a recent court case, in which a wife sought – unsuccessfully – to have a pre-nup dismissed.
The couple began living together in 2004 after both had previously been married and divorced. When their first child arrived, the wife encouraged her partner to wed her – something he was reluctant to do having endured a bruising separation from his first wife.
He eventually agreed on the proviso they entered into a pre-nuptial agreement, which restricted her rights on divorce to terms far lower than those she would get from an equal rights settlement.
The husband was by far the wealthier of the two, having set up a successful travel business, which he hoped to pass on to his children from his first marriage.
The marriage went ahead but broke down five years later, at which point the wife sought to have the pre-nup thrown out on the grounds that she had been put under undue pressure to sign it – an argument dismissed by the judge, who said the wife had signed the agreement of her own free will.
However, the court did agree that the terms of the pre-nup, which limited her to a lump sum of £600,000 and then £2,000 a month, were unfair and did not meet her needs. The judge increased the lump sum to £1.35m and increased the annual payments from £24,000 a year to £100,000 a year, falling to £75,000 a year when the couple’s child turned 21.
While the original terms of the pre-nup were amended, its existence protected the bulk of the husband’s wealth. Without such an agreement, he could have faced the prospect of losing 50% of his assets.
While this case involved eye-watering sums of money, the principles apply to those involving more modest assets.
How can Gotelee help?
While pre-nups may not be the most romantic means of preparing for married life, they can be an effective tool in planning for the worst.
This is particularly the case for those who have been married before and would like to ring-fence family wealth, have children from previous relationships or have significant assets.
But this is a complex legal area where specialist advice is essential to make sure the document is effective and water-tight. Gotelee has a wealth of experience in working with couples to draw up agreements that work for both parties.
To find out how we can help you, visit us at one of our offices in Ipswich, Felixstowe, Hadleigh or Woodbridge, or call 01473 298101.
