Pre-nuptial agreements: rise of the pre-nup
Pre-nuptial agreements are becoming more commonplace among normal people. So who needs one and what will it cost?
Thought pre-nuptial agreements - or pre-nups for short - were just for celebrities? Think again. Lawyers have reported that humble farmers and entrepreneurs are among those fuelling a dramatic rise in those safeguarding wealth before marriage.
What is a pre-nup?
A pre-nup is a legal contract signed by couple at least six weeks before their wedding. It sets out how their assets will be divided if they divorce. It can also state general principles about how they would approach a split.
For example, a pre-nup could state that both parties keep their pre-existing properties but split any assets acquired after the marriage.
Pre-nups have traditionally been used by the super-wealthy who want to avoid handing over half their money if the marriage breaks down. Britney Spears famously avoided losing a hefty chunk of her £65 million fortune when she divorced Kevin Federline after two years of marriage. The reason? She had safeguarded her global business empire with an iron-clad 60-page pre-nup.
Who needs a pre-nup?
Two youngsters with no assets can probably embark on married live without a pre-nup.
But more of us are tying the knot at an older age - according to latest figures from the Office for National Statistics, the average age that we exchange our vows in 36.2 for men and 33.6 for women.
By that age, when they may have established a business or wealth, and perhaps have children from a previous relationship, there is a greater need to ring-fence assets.
If a couple are about buy a home together and one contributes more than the other to the deposit, this money could also be safeguarded by a pre-nup. Lawyers say that parents who gift money to a child are increasingly insisting that a pre-nup is signed if the money is to be used to buy a marital home.
There are other reasons for drawing up the paperwork as well.
The recent increase in the price of farmland means that more farmers are signing pre-nups to avoid selling the land - which could be part of the marital home - as part of a divorce settlement.
And entrepreneurs are also insisting that their future spouse signs away any right to the business. This applies even to start-ups, where businessmen believe their business will increase in value throughout their marriage.
But are pre-nups legally binding?
No. Under the law in England and Wales, a pre-nup does not bind the Court as to what should happen in a divorce. However, Courts are increasingly attaching more importance to pre-nups, as long as they are fair and properly entered into.
Back in 2010 pre-nups were given a legal boost by the highly publicised divorce of Katrin Radmacher, the £100 million German heiress.
It is imperative that a bride and groom getting a pre-nup both seek legal advice and be clear about each other’s finances. There can be no suggestion that anyone was pressured to sign the pre-nup, or didn’t understand it, otherwise this could weaken the validity the document.
It is also worth saying that the longer the marriage, particularly if children have been born, the less weight a pre-nup holds. This is because a Court’s most important consideration will always be provision for any children. A pre-nup in the case of, say, a twenty-year marriage has never been tested in the UK.
However, couples can always amend their agreements according to their changing wealth and circumstances under documents known as ‘relationship agreements'.
How much does a pre-nup cost?
Unsurprisingly, as lawyers are involved, pre-nups don’t come cheap.
Depending on the circumstances, you can expect a lawyer to take around three to four hours to complete the paperwork in a straightforward case. They can charge anything from £200 an hour, meaning you are looking at more than £800 just to get the document drawn up.
Then the other party must seek legal advice and get another lawyer to check the paperwork, which is likely to incur several more hours of work.
Any extra communication with lawyers such as phone calls, letters and even emails will usually cost you more. Remember to factor all these costs in when choosing a lawyer.
Do you have a pre-nup? Would you ever get one? Let us know what you think in the comments section below.
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