We don’t think twice about paying for car insurance, we hope we will never need to use it but in the event of a breakdown or a collision, we are grateful for the cover it provides and for the hassle it spares us. So why don’t we take a similar, insurance based approach to marriage?
In the unfortunate event of a marriage breakdown, the courts have considerable discretion to determine the financial matters. The Court will look to the Matrimonial Causes Act 1973 and consider factors such as the length of the marriage, parties’ ages and earnings before making orders regarding the family home, pension funds and other matrimonial assets.
Having a pre-nuptial agreement in place can help remove the uncertainty that accompanies financial proceedings.
A ‘pre-nup’ is an agreement in which a couple set out what property or assets each have at the time of the marriage and how they would like assets to be divided should they later divorce. This can be particularly valuable where one or both of the couple have children from previous relationships and wish to safeguard assets for their respective children, or where one of the parties’ families are gifting or loaning money for a home and wish this to be protected.
No pre-nuptial agreement will override the 1973 Act nor prevent a Judge from deciding on an appropriate division of assets, but it will be considered as a relevant circumstance of the case. The Supreme Court in a case called Radmacher v Granatino (2010) said that pre-nups should be upheld if they are freely entered into by each party with a full appreciation of its implications unless it would be unfair to hold the parties to the agreement in the circumstances. An example of this would be when the agreement would not meet the needs of any children of the family.
In order to satisfy this, and to be given serious consideration by the Court, there are various safeguards which should be in place when a couple enter into such an agreement. To avoid concerns regarding undue pressure, agreements should not be made within the 28 days preceding the marriage ceremony. Furthermore, to ensure that both parties are making a fully informed decision, they should collect and exchange financial documents such as bank statements so that it is clear what their respective financial positions are and what they could be entitled to in the case of a divorce. Each party should also receive independent legal advice so they can fully understand the consequences of entering into the agreement.
It may seem an unromantic topic to discuss, but having a pre-nuptial agreement in place can save parties money and stress if the marriage does break down in the future. Couples will obviously hope that they will never need to rely on it, but as with car and home insurance simply knowing that it is there ‘just in case’ can bring peace of mind.
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