Nuptial Agreements – Shouldn’t They Just Say That My Spouse Gets Nothing?
- Family Law
Over the years, I have spoken with many clients in relation to pre- or post-nuptial agreements and one common theme is the idea that these documents can or should simply state that a future or current spouse gets nothing from the assets that have been introduced by the other.
In my view, there is a slight misunderstanding about what nuptial agreements are there to achieve. Many appear to believe that these are documents can simply prevent a spouse from gaining a share of their assets in the event of a divorce. However, a properly prepared pre- or post-nuptial agreement is somewhat more complicated than this.
Firstly, a little background about nuptial agreements themselves. There are two main types. The first is a pre-nuptial agreement which would be prepared and entered into prior to marriage. The second is a post-nuptial agreement which would be agreed and signed by parties who are already married.
Commonly, pre-nuptial agreements are used where one party is bringing the majority, or all, of the wealth into marriage and wishes to protect his/her assets as far as they can in the event of a future marital breakdown and divorce.
Post-nuptial agreements are a little different as the parties are already in a marriage, but these are sometimes prepared as “mirror” documents which repeat the terms of a pre-nuptial agreement so that they can be signed after parties have wed or, alternatively, they may be prepared if one of the parties is receiving a large inheritance or financial gift from family. Indeed, some families may demand that a post-nuptial agreement is signed by the parties before any financial gifts are given to the parties to protect them from being lost in a divorce.
As a solicitor advising on these types of documents, they represent one of the more complicated aspects of my job. This is because there are so many elements to consider not to mention the fact that it is necessary to, essentially, “crystal ball gaze” into the future of the parties’ marriage and financial positions. When consulted on such a document, solicitors must establish what the client and their future or current spouse have in terms of financial assets and income.
They must also establish what is to be protected (which may include potential future assets of unknown type and value, such as inheritance) and ensure that the agreement has a solid prospect of being upheld by the Courts if called upon by identifying the potential future needs of both parties (and any children) and catering for them. There are also many other points to consider including when, and how often, the document is to be reviewed. This type of advice needs to be detailed and thorough otherwise the risk is that the parties will not have a complete understanding of what the document means for them in the event of a divorce, and it may, therefore, not provide adequately for them or be upheld by the Court when called upon.
There is no doubt about the benefits associated with properly prepared nuptial agreements and these are beginning to filter through to the public. Many individuals are now looking at them as pre-requisites to marriage and wish to explore their financial ties (or proposed financial ties) as early in the relationship/marriage as possible, particularly those bringing their own wealth to the table and/or those entering into second or third marriages for example. Recent cases involving nuptial agreements have reminded us that the Courts possess the power to ignore all, or part, of a nuptial agreement if it does not adequately provide for each party’s needs upon divorce. Therefore, as a reminder, it is important to repeat that a nuptial agreement is, at present, only likely to be upheld if both parties have given thought to, and provided for, the anticipated needs of each other in the event of their marriage failing. If they do not do so, then there is every reason to believe that the Courts may not uphold the agreement in full or potentially even in part.
Given that the primary purpose of a nuptial agreement is to provide as much certainty as possible about what might happen in the event of a divorce, failing to meet the legal requirements for nuptial agreements is almost certainly not going to be in the parties’ interests as it reintroduces the very uncertainty they are seeking to avoid.
Under current law, nuptial agreements are only likely to be upheld by the Courts if the following fundamental factors are present:
- The agreement must be freely entered into by both parties.
- The parties must have a full appreciation of the implications of the agreement.
- It must not be unfair to hold the parties to their agreement in the circumstances prevailing.
In the absence of the above factors, a nuptial agreement might not be upheld by the Courts in full or even in part. Therefore, anyone considering the prospect of entering into such an agreement should expect to receive detailed legal advice about its contents together with its effect on them. They should also be prepared to provide full financial disclosure regarding their current position in return for receiving reciprocal information from their future or current spouse. If this happens, the parties can then rest a little easier in the knowledge that the agreement has a greater chance of being upheld by the Courts if relied upon in the future.
If you are contemplating a pre- or post-nuptial agreement with your future or current spouse, then we at Summit Law would be happy to talk through your options with you. The family team at Summit Law has significant experience and expertise in dealing with the preparation of nuptial agreements and advising parties about their meaning and effect of them. We will be able to help and support you by providing friendly and bespoke advice tailored to you, your case, and your needs.
Our family team can be contacted on 020 7467 3980 or by e-mail at firstname.lastname@example.org.