Print this pagePrenups - Do they mean business?
Principal Jane Anderson specialises in financial provision on divorce and separation and is one of the region’s most respected Family lawyers. In this article, Jane looks at the current view on prenuptial agreements, particularly where business assets might be involved...
It is common knowledge that going through a divorce is one of the most stressful life events. Apart from the emotional fallout resulting from the breakdown of a relationship, anyone undergoing a divorce is likely to be worried by the uncertainty of litigation, the likely costs involved and the potential outcome.
In general terms, the divorce proceedings themselves are straightforward, but it is the resolution of the financial aspects which can be long winded and expensive. It is the uncertainty of the financial outcome which usually results in additional legal work especially where there are complex issues to be resolved such as the value of a business. There have been a number of high profile divorce cases decided in recent years which have clarified the court’s likely approach when considering the division of assets acquired during the course of the relationship. However, there is still scope for significant argument - for example in relation to assets preowned by one party prior to the marriage, or capital subsequently inherited. As two judges could reach a different solution when resolving the same case, should we not concentrate on taking early precautions to prevent a messy and costly divorce?
The good news is that prenuptial agreements are once more under the spotlight following the Court of Appeal decision in the case of Radmacher. A prenuptial agreement is a document signed by both parties in advance of the marriage, setting out the division of assets should there be a subsequent divorce. Historically, prenuptial agreements have not been viewed as legally binding by the courts at the time of a divorce, but were treated as one of a number of different factors to be considered by the court when deciding a case: ultimately it was up to the judge to decide what a fair financial outcome should be. It would seem likely, however, that post-Radmacher, a change in the law is in the offing as a result of the Law Commission’s involvement. But whether there is any real enthusiasm to effect change to ensure that prenuptial agreements are legally binding in future remains to be seen.
As the law stands now, is it worth entering into a prenuptial agreement? The answer must be yes, especially if one party has significantly greater assets than the other, acquired prior to the relationship. Of course for some, the prospect of considering what should happen in the event of a divorce before they marry is just too much; but for those that do wish to go ahead, it is absolutely vital that the correct procedure is followed if you want any chance of influencing the court that the prenuptial agreement is appropriate. In summary, both parties should provide full disclosure of their finances, have independent legal advice before the deed is signed and there must be no undue pressure on one party to sign. The Law Commission has recommended that the deed should be signed at least 21 days before the marriage. Even if all these requirements are complied with, the court is more likely to uphold the terms if the marriage is short and childless.
Find out how we can help you
For further advice on prenuptial agreements or in relation to the division of assets on divorce please contact either Jane Anderson or Iain White on 01603 625231, or email jmanderson@cozens-hardy.com or idwhite@cozens-hardy.com
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