Nuptial agreements are an increasingly common occurrence in marriages and are quite often awkward talking points for couples.
Whether you are uncertain that an agreement can be reached, whether you fear external judgement or you simply don’t like the thought of your marriage failing, the topic is something many try to avoid.
However, whether you’re about to enter a marriage or your situation changes whilst in one, it’s vitally important to consider the question - How do we protect ourselves and our interests if this all goes wrong?
As part of a series of expert insight pieces, we sat down with Knights family partners, Shane Miller and Jill Roberts to gain an understanding of what to take into consideration if you’re thinking a pre- or post-nuptial agreement is right for you.
What are pre and post nuptial agreements and what is the main differences?
JR: The pre- or post-nuptial agreements are contracts parties enter into either before the marriage or after the marriage. They set out what would happen, in terms of finances, should the relationship break down and they must go through divorce proceedings.
In what circumstances would a person look to go ahead with an agreement?
SM: An agreement would be to safeguard and preserve assets and often are agreed pre-marriage. They tend to be more common when people are on their second or third marriages or when somebody has inherited substantial wealth. People also tend to move forward with nuptial agreements if they’re looking to preserve a legacy or business.
JR: To add to that, we’re also seeing quite regularly now that parents are encouraging their children to enter into post-nuptial agreements due to tax changes. Because of alterations to Inheritance Tax, parents might not want money gifted to their child to be split evenly should their child’s marriage come to an end.
What are the biggest myths or misunderstandings around pre and post-nups?
SM: There is a major misunderstanding generally that you don’t need independent legal advice, that you don’t need frank disclosure and that you don’t have to review the documents. You need all three of these to ensure it’s as secure as possible.
JR: I'd probably say the biggest misunderstanding is that these agreements are not worth the paper they're written on. They are completely enforceable but with the caveat that the courts retain jurisdiction to amend/overturn them if necessary – unlike what you see on TV shows in America. In this country, the court needs to ensure the documents have not been signed under duress, that there has been full and frank disclosure, that both parties have received legal advice and that they are ultimately fair and meet need, particularly if there are children. If these conditions are met, then the court is more likely to enforce the prenup than not. However, if they’re not then the court has the power to step in.
What advice would you be giving to clients?
SM: Practically, we would look to help our client understand the various connotations of what they’re looking to achieve and how they can best deal with the assets of their marriage – essentially, what is needed to preserve their interests.
We hope our clients have long and happy marriages but it’s our job to protect them if they don’t. We’ll guide them through the necessary documents to ensure that, if they were to separate, they have the necessary security for their contributions and legacy issues.
A pre-nuptial agreement should also be entered into at least three months before the marriage is due to take place – with it being signed 28 days prior. Both parties would have to obtain their own independent legal advice with full and frank disclosure on all financial assets – with their intentions highlighted.
You would also need to consider a review clause that would consider any life-changing that might render an agreement moot – for instance, the birth of a child.
The key point to make is that, whatever is decided, these agreements must be reasonable and fair – with no one forcing the other into it.
JR: The most important bit of advice for a successful agreement is for you to be open and transparent with each other. I would advise clients to have this conversation early – when you are looking forward to your marriage, rather than looking towards the end of it.
It's easier to have these discussions when you're in a good place, as opposed to when your emotions are heightened during divorce proceedings and you've got lots of different factors that are pulling you in different directions.
Also, even if you’re already married, these processes take a fair bit of time to be negotiated so you should be doing all you can to ensure there is sufficient time to get it completed.
However, there are some situations where it may be that we advise clients not to enter into an agreement. This would be part of the initial stages, but it could be that they haven't discussed this with their fiancé(e) at all and are not in the position to take it forward.
Do you find people are reluctant to enter into an agreement because of perceived social pressure?
JR: There’s a lot of emotion that comes around proposed nuptial agreements and, traditionally, there is a lot of taboo when it comes to discussing finances, so you do see people reluctant to move forward with them for a variety of reasons. However, I think younger generations are becoming more open to having those conversations that elder generations might have struggled with.
People will always question the validity of these agreements as there is a perception your relationship is doomed to failure if you enter one. Now, these agreements might not be romantic, but they are sensible and I would challenge the belief that marriages will break down as soon as you sign on the dotted line.
There can be huge advantages to these agreements but, due to the emotion involved, it’s ultimately down to the individuals involved as to what they’re prepared to do.
Shane Miller and Jill Roberts are Family Partners based in the firm’s Worcester office.