The words ‘prenuptial agreement’ are usually associated with celebrities and the rich and famous. But, in an age of rising divorces, is this something we also need to consider before getting hitched?
Here matrimonial lawyer Georgia Marshall explains what a prenuptial agreement is and how to go about it.
What is a prenuptial agreement?
Commonly referred to as a ‘prenup’, a prenuptial agreement is an agreement between parties who are about to get married, in which they set out how their assets are to be divided in case of divorce.
A prenup allows parties to specify that certain assets are not to be treated as matrimonial property and are not to be divided between the parties.
Historically prenups were not given any weight by the courts, and in the majority of cases, they were not really worth the paper they were written on.
All this has changed since October 2010 when the highest court in England broke with precedent and held that prenups, if properly negotiated, could be determinative of the distribution of assets when a marriage breaks down.
What are the necessary ingredients for a prenup?
In order for a prenup to be given due weight by the court there must be full and frank disclosure made by the parties as to their finances.
Each party must be given the chance to obtain independent legal advice; and there must be no undue pressure put on either of the parties to enter into the prenup.
Also, neither party must be under an infirmity.
Essentially the parties must have an equality of bargaining power when negotiating the terms of their prenup.
What do I have to disclose to my fiancé?
The basic rule is that both parties must put all their cards on the table face-up.
That means that you must make full and frank disclosure of all of your financial resources.
This includes what you now have and what you are likely to have in the foreseeable future. For example, this could include a likely inheritance or the fact that you are on the deeds to your parents’ house.
The term ‘financial resources’ is very broad and includes not only what you own in your own name, but also those assets over which you have a beneficial interest (such as assets held in a trust), or which you own jointly with others.
Do I have to have a lawyer representing me?
Both parties must be given the opportunity to obtain independent legal advice in relation to the proposed terms of the prenup.
There must be a reasonable time prior to the wedding date for the parties to take advice and to reflect on the terms being proposed in a calm and unpressurized environment.
The terms of the prenup will usually make provision, which is less than a court would award, so if any of these basic safeguards are not adhered to, the prenup will be tainted and this will affect the weight that the court will put on it.
What weight will be given to a prenup by the courts?
Parties to a divorce cannot by private agreement such as a prenup, prevent the court from considering and making orders distributing the assets of the marriage when it ends.
What this means is that each case will depend on its own specific facts, and that a prenup does not prevent a party from applying for financial relief following the breakdown of the marriage, even if there is a validly entered prenup in place.
However (and this is a big ‘however’), when an application is made, the court will consider the terms of the prenup, how much weight it should place on it, and to what extent the terms of the prenup should be given determinative weight.
The ‘new rule’ is that the court will respect the wishes of parties who enter into properly negotiated prenups and will give effect to the prenup, unless it would be unfair to do so.
Should I enter into a prenup?
Prenups will not necessarily be desirable for everyone contemplating marriage; however, couples may want to consider taking the opportunity to clarify what the financial arrangements between them will be, should the marriage fail, and to formalize those arrangements in a prenup.
This is particularly relevant where prior to the marriage, both parties have separately acquired significant assets which they do not intend to become joint matrimonial assets after the marriage; where one party is in a significantly stronger financial position than the other; or where it is likely that during the marriage one party will inherit or be gifted financial resources from sources external to the marriage, such as from a family trust.
Any person contemplating whether to enter into a prenup should consult with an attorney who specializes in or who has substantial experience in matrimonial law practice.
Georgia Marshall is a matrimonial lawyer and partner with Marshall Diel & Myers. Contact 295-7105.
Fairytale Weddings January 2012