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Prenups Are Just Another Kind of Insurance

10 January 2007

The recent high profile Miller and McFarlane divorce rulings in the House of Lords have inevitably raised the stakes for prenuptial agreements.
Just a reminder that Julia McFarlane won her appeal against the time limit imposed by the Appeal Court on her maintenance while Alan Miller lost out in his appeal against an award of £5m to his wife after a two and a half year childless marriage.

Dismissed by some as unromantic, demonstrating a lack of trust in a future spouse, prenuptial agreements are, in fact, just like any other kind of insurance – and could make the entire process a lot less expensive in the unhappy event that the relationship breaks down.

Couples contemplating living together quite often enter into an agreement before buying a property so they can sort out mortgage contributions and other outgoings. Couples getting married are generally far more reluctant to do so.

But discussions relating to money, where you are going to live, how soon you intend to have a family, whether you will both work full-time and how much you are going to spend on your wedding are fundamental to the business of getting married.

Prenuptial agreements aren’t enforceable in law – in other words whatever agreement is made by both partners, it can always be set aside by the court in a divorce case if it is unfair to one party.

Although Parliament shows no sign of changing the law, increasingly the courts are paying heed to the declared intentions of both parties when it comes to dividing assets in a divorce. And in one or two cases they have simply upheld the settlement which the husband and wife agreed in advance.

There are a number of ways to maximise your chances. The most obvious is to make sure that both parties seek independent legal advice over the terms of the agreement. It’s also essential to disclose to your future spouse exactly what assets and expectations you have.

The more eventualities your agreement provides for – such as the birth of children - the more likely the court will give it serious consideration.

It is very important that both partners have time to consider an agreement and discuss any changes they want to make. Presenting your future bride with an agreement the week before the wedding and demanding she / he sign it or you’ll call the whole thing off is hardly likely to endear you to the judge should you later divorce – just assuming you made it up the aisle in the first place!

Most people think that prenuptial agreements only apply to the wealthy. But there are other couples for whom they are particularly appropriate. Those who have already been through the divorce process, for example, and are put off the idea of remarriage. Or divorcees and bereaved spouses with grown-up children who may see their parents’ remarriage as a threat – not least to their inheritance.

Sensible people discuss things in advance. Talking about what might happen if things don’t work out no more indicates an intention to split up than buying insurance suggests the desire to have an accident.

For more information please contact James Muir-Little, Partner.
 

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