By AINA KHAN
Prenuptial Agreements, better known as Prenups, are now seen as THE way to protect Family Assets. The recent Supreme Court case of RADMACHER in the summer of 2010 decision was astonishing in its impact – both in the media and on the public. Katrin Radmacher won this landmark Supreme Court case to enforce a Prenup, which protected her personal wealth from legal claims by her former husband.
There has been increasing pressure in recent years from Europe, where Prenups have been fully binding for years, and from America, which takes the view that adults should be entitled to regulate their finances as they choose without interference from the state.
There was always resistance in the UK because Prenups were seen as unromantic and showing a lack of trust in the marriage. On the contrary, they allow a couple to settle their financial affairs first and then get on with married life, knowing that financial gain is not an option and that they can fully trust each other.
Prenups may look very modern and 'cutting edge' in the UK. Consider then the Islamic marriage contract introduced nearly 1,500 years ago, in which the husband must provide for his wife on death or divorce – the idea is to do away with court settlements and to have finances settled before marriage. The groom has to give what he can afford now and can defer the rest. It appears we are only now starting to challenge the concept of a UK court dividing assets.
What are the main reasons why people are entering into a Prenup?
1. Half The Cake – always fair?
UK court divorce settlements are rather a lottery, depending on individual judges. Approximately 50% of marriages in the UK end in divorce and particularly in the case of wealthy parties, the starting point is often a 50:50 share of all property and assets. If you are considerably wealthier than your fiancée, the results can often appear highly unfair. A Prenup can ensure that your fiancée is marrying you for who you are, and not for your money.
2. Once Bitten - Twice Shy!
Your assets may already have been decimated by an unfair division of financial assets on divorce.
3. Inherited assets
Some assets have been "in the family" for generations, with the intention that they should stay in the family and not be sold or depleted in the event of a divorce in order to satisfy a court-imposed financial settlement. You may already have inherited family assets, or may have a reasonable anticipation of inheriting such assets in the course of time, perhaps during the marriage. By entering into a Prenup it is possible for these inherited assets, or assets that may in the future be inherited, to be ring-fenced to a degree and with a reasonable expectation that they can be kept out of any future financial settlement on divorce. Without a Prenup you can be sure that they will be taken into account by the court.
4. Children and Dependants
If you have dependent children from a previous marriage, you may want to ensure that their interests and wellbeing are not jeopardized on divorce and that the interests of your ex-spouse do not take precedence over their financial security.
5. Overseas wealth
You may not be a UK resident and you may have property and assets outside the UK. If you decide to marry and settle in the UK, you may not be aware of the fact that, on divorce, the English courts are quite likely to take into account your worldwide assets and divide them on a 50:50 basis. A UK court will largely ignore how your overseas assets would be treated under the law of the country in which they are situated. So it may expect you to sell your overseas assets, even though that is not only contrary to your wishes but also to the wishes and expectations of your other family members in your own country.
If someone wants to have a Prenup signed, I would advise them:-
It’s not easy to talk about your loving, committed relationship as if it were a business arrangement. If you and your fiancée can agree to be logical (rather than emotional) about the preparation of a Prenup, you will find it much easier.
Do not wait until a week before your wedding to discuss a Prenup. Explore this idea early in a relationship if possible. At the very least, a Prenup should be signed at least a month before the wedding in order to be safe from legal challenge.
You should both disclose your income and assets to each other.
Each of you must take individual legal advice.
THE FUTURE
The traditional method of preparing Prenups was adversarial. Couples now want to begin their married life on a footing where documents are drawn up by consent.
Research reveals that around half of British people would like to see Prenups made legal. Postnups are also gaining in popularity. Over a third of married people admit that if they came into a large sum of money, they would consider taking out a postnup to protect their money should divorce look likely.
Research from Harvard shows that people are falsely optimistic about the success of their marriages, and they fear that requesting a Prenup would signal uncertainty about a marriage. Though people correctly identified the national divorce rate at close to 50 percent, they believed their own chance of divorcing was just 11.7 percent. The more optimistic they were about the enduring success of their marriage, the less likely they were to consider requesting a Prenup. Just like everyone thinks they are a better-than-average driver, everyone thinks that there is no way their marriage will end in divorce. Some realism would not be misplaced.
It does seem startling in this age to give over control over one’s assets to a judge. You may have considered a Prenup unromantic – but how romantic is a courtroom?
AINA KHAN
Aina Khan is a well known UK solicitor, specialising in Family Law since 1991. She is the Head of the Family Department at Woodroffes Solicitors in London SW1. She is also Family Law Consultant to various law firms around the UK. Aina is an accredited member of the Law Society’s Family Panel and Children Panel and an experienced advocate.
She frequently appears in the media and recent appearances include Channel 4’s Chilcot Enquiry, BBC’s Newsnight, Radio 4’s Woman’s Hour and Unreliable Evidence, Sky News and BBC News. She writes articles and lectures in her specialist areas, recently speaking to the House of Commons, universities here and abroad, and barristers’ chambers, as well as training other lawyers.