What assets are you bringing to your new beginning?
Sometimes you get married and it doesn’t work out. One reason this happens is that the person you chose to spend your life with, is not the right one for you. The stigma of Divorce is slowly fading away in most cultures and it is often seen as more desirable to be happy than remain in a difficult marriage. There is research to show that children in homes where there is an unhappy marriage suffer more emotional harm than if their parents separate.
Over time, you might find someone else that you start a relationship with and you decide that you want to get married again. So what baggage do you have before you enter this second or subsequent marriage? When I say baggage, I mean what assets, debts, pensions, capital, business interests, etc do you have when entering into your marriage? Do you have children or grandchildren that you support financially? Have you had a conversation with your future spouse about how to manage all of this baggage before you get married?
What should I be thinking about?
One thing to note is that once you are married, your finances will become combined and if that marriage breaks down, you may be entitled to half of the other’s assets/capital/pensions. How can you protect your interests and your spouse’s interests at the same time? The most simple way to do this is to have a Pre-Nuptial Agreement in place. If you are already married you can have a Post-Nuptial Agreement prepared. I can imagine, that when you hear the words Pre-Nuptial or Post-Nuptial you are thinking about celebrities or footballers with a large income but this is just not the reality anymore. In fact, having a Pre-Nuptial or Post-Nuptial Agreement in place, not only protects you and your future, but also the future of any children or grandchildren.
What type of baggage are we talking about here? I am not talking about £1million properties or having a £5,000 monthly income – I am talking about any person who has any financial asset or interest that they wish to protect. When you are entering into a second or subsequent marriage, you may be entering with a settlement from a previous marriage which may include properties or a lump sum. You may have a Pension Sharing order from a previous spousal or Spousal Maintenance which may potentially stop upon your re-marriage. You might already have assets and properties of your own including any savings, ISAs, or investments and it is perfectly reasonable to want to protect those assets for yourself and your future. You may have children or grandchildren and decide that you want to help them financially in the future either by giving a lump sum or helping with paying for education or childcare. These issues apply to everyone and that is why it is important to think about them.
How does it work and what information do you need?
A Pre-Nuptial or Post-Nuptial Agreement can be prepared by any Family Solicitor in the UK. Some factors need to be taken into consideration before the preparation of an agreement to ensure that it has legal validity. You have to remember that in having an Agreement of this nature – if there was a breakdown in your marriage you would be asking the Court to enforce something that is not legally binding. This means that there is no law relating to this type of Agreement. Financial matters on divorce are covered by Section 25 of the Matrimonial Causes Act 1973 but this does not cover Pre-Nuptial or Post-Nuptial Agreements. The Courts use issues within a case to make decisions and give guidance to other Courts and lawyers about issues that are not covered by the law. The case of Radmacher v Grantino [2010] UKSC 42 is an important case for Pre-Nuptial Agreements and the guidance is set out in the decision made by the Judges in that case.
What are the main points I need to consider before taking the first step?
A Pre-Nuptial or Post-Nuptial Agreement is made in good faith, having full disclosure of both sets of assets, liabilities, capital, and pensions. In some circumstances, you may also need to look at your partner’s Will. You also need to have Independent Legal Advice. This means that, whilst you can ask one Solicitor to prepare the Agreement, you do need to have a one-off appointment with another Solicitor to make sure that you understand what is in the order and that you are happy to sign it. The independent Solicitor can then make sure that you are not being forced into it and that you know exactly what is in the Agreement in a way you can understand. There is also a time issue to deal with – you cannot ask for a Pre-Nuptial Agreement to be prepared within 14 days before the date of your wedding. It has to be done before this time, to make sure that you have time to have proper legal advice. A Post-Nuptial Agreement, on the other hand, can only be entered into after the date of the wedding. The requirements of full disclosure and independent legal advice are still the same because the outcome is the same.
There is too much emphasis on the negatives of having a Pre-Nuptial or Post-Nuptial Agreement in place because you are already assuming that the marriage will not work. But if you turn this around and think about how you are protecting yourself, your assets, and your wishes about how your hard-earned money is to be used in the future by you or your loved ones. There is nothing to stop you from sharing certain assets with your new spouse but what is important is that these financial conversations take place before the marriage and if necessary an Agreement is put into place. If you think this would benefit you, or you want some general advice, please Contact me for a conversation.
If you are thinking about going ahead with either a Pre-Nuptial or Post-Nuptial Agreement, you may also wish to take Independent Financial Advice or consider financial planning. You may have to take into consideration tax implications or other costs that a Solicitor may not be able to advise you about.