High profile celebrity relationships have made prenuptial agreements increasingly fashionable, but that doesn’t mean they are right for everyone says Marilyn Stowe, senior partner with Stowe Family Law.
“Personally speaking, I don’t like the concept of prenuptial agreements,” says Marilyn Stowe. “I don’t think they are socially necessary and I don’t believe they should be automatically binding. I definitely wouldn’t enter into a relationship with someone who wanted me to sign one before we got married. And I am disturbed by the increasing trend of people who seem to consider a ‘prenup’ just another part of the process when they’re getting married.
“However, many people see this type of agreement as a way of providing protection if their relationship breaks down and as a lawyer, of course I advise clients to consider the financial implications of their relationship. But especially with young couples, sometimes one partner can feel trapped by the arrangement. This often happens if their partner or their family is wealthier and therefore is calling the shots and dictating the terms of the agreement. The wealthier partner can feels that the agreement gives them carte blanche to do what they like and that can seriously impact on the marriage.
“For older couples, perhaps on a second or third marriage, with children from previous relationships to protect, a ‘prenup’ can be a sensible option. The same applies to parental gifts or to an inheritance that needs protecting. It’s also worth noting that gifts can be a way of mitigating inheritance tax, however the protection the ‘prenup’ provides for the gifts can add additional pressure to the relationship because there is suddenly inequality in their financial affairs.
“When gifts are an issue, it’s worth investigating other options such as parents taking a charge over the couples’ property, fully legally advised on both sides to make it legally secure. It is tax ineffective, but in a divorce, the court will take it into account, probably even more so than a ‘prenup’ because currently all property is available to share during a divorce, and a court may disregard the ‘prenup’ to meet those needs.
“In the UK, if you are getting divorced, having a ‘prenup’ doesn’t automatically stop the court from imposing a financial settlement, because there is a degree of flexibility and court discretion when working out the division of assets, but a properly drawn agreement will carry weight with the court, and this obviously makes it attractive to many couples.
“If you are going to sign an agreement then I’d always advise both parties to get independent legal advice before they sign. And if the agreement comes up in a divorce proceeding I’d want to know how long before the marriage it was signed; whether there was any pressure put to the couple to sign; were all assets disclosed at the time of signing and was there any negotiation before signing or did one party get all their own way? Finally, have both parties needs been met through the agreement?
“So if you read figures that tell you that ‘prenups’ are on the rise and starting to become a normal part of marriage process , it doesn’t necessarily mean that we’re going in the right direction. The main thing to bear in mind is that there is no perfect answer and that it is up to each individual couple to work out what is best for them. If in doubt, take some independent legal advice. And if you are entering a relationship and are worried about the future, drawing up a ‘prenup’ before getting married will give a lot more protection to each party than simply cohabiting, especially if there are children in involved.
“In the end, for me, a little more romance and good communication and a little less cynicism going into the relationship is more likely to keep your marriage going if things get tough than any piece of paper will ever do.”
Stowe Family Law LLP