Pre-nup agreements and pensions in divorce
Pre-nup agreements and pensions in divorce
What is clear is that the case has removed the long standing view that pre-nup (properly known as ante-nuptial) arrangements were void in the UK and contrary to public policy.
It is our belief that following the judgment a properly drawn up and freely entered into ante-nuptial agreement will be upheld unless there is a change of circumstance subsequent to the marriage that makes the agreement unfair. It is worth noting here that ante-nuptial agreements are equally applicable to civil partnerships and should be referred to as pre-partnership arrangements.
In spite of the Supreme Court judgement the legal basis for splitting marital assets remains unchanged and will probably remain so for some time yet. Irrespective of the advice given at the time, or the wording of the agreement, there is no guarantee that its existence will give certainty to either party, or avoid litigation, in the event of relationship breakdown.
The principle established in Radmacher is that the Court should give effect to agreements where each party has a full understanding of the implications and has freely entered into it at least 21 days prior to the date of the marriage.
This principle should apply even if the provision made in the agreement would not be considered fair without the agreement.
The exception would be if there was a change of circumstance since the agreement was entered into such that the agreement would now be considered unfair.
For example, consider a situation where a husband acquired significant wealth as a result of a business reaching maturity and being sold during the marriage that had not been considered or anticipated prior to the marriage.
In such a situation the wife would have to demonstrate that the couple's circumstances had changed significantly such that the agreement is now unfair, for the Court to interfere with it.
If she was unable to demonstrate a change in circumstances she would, in effect, seem that she will be held to having made a bad bargain.
There is every possibility therefore that a pre-nup will create an environment where an individual is treated unfairly in the event of a divorce notwithstanding the existence of a pre-nup.
So who might consider a pre-nup in future?
Any potential beneficiary of a trust fund, or an individual who expects to receive significant capital from an inheritance, compensation award, or other form of settlement.
Divorced individuals looking to ring fence their own assets or wealth prior to a second or subsequent marriage.
Entrepreneurs who may generate significant wealth during the course of a marriage perhaps as a result of the growth or sale of their own business.
Expert Financial Solutions Ltd believes that wealthy and potentially wealthy individuals considering marriage should discuss the possibility of entering into a pre-nup with their prospective spouse or civil partner.
Individuals should take suitable independent legal advice in all relevant jurisdictions and ensure that full financial disclosure of all currently available assets and possible future assets has been made.
When considering the drafting of the agreement it will be necessary to give consideration to the parties' wishes and intentions for the future; this might include pension sharing, division of investments and savings, provision for children and non working partners by way of maintenance payments or capitalised maintenance.
Perhaps in future we might see the development of a slightly different version of the Form E used in ancillary relief to enable appropriate disclosure to take place. In the meantime Expert Financial Solutions Ltd, independent financial advisers and Chartered Financial Planners based in Witney, Oxfordshire can assist in identifying, understanding and valuing pension and investment assets for the purposes of disclosure, and creating financial plans to enable individuals and couples achieve financial independence prior to or after a marriage.
Expert Financial Solutions Ltd.
December 2010.
Overcoming a Divorce - 3 Helpful Steps to Overcoming a Painful Divorce Are You Getting The Right Divorce Support After Your Divorce? Charlie Sheen Files for Divorce Divorce Mediation San Diego the best way to hassle free divorce Issues that determine the costs of divorce Getting a best Divorce Attorney Before going to Court Good News for Divorced Individuals! How to get a fast divorce no matter where you live He's Thinking About A Divorce. What Can Or Should I Do? How To Find An Fort Lauderdale Divorce Attorney Signs That Your Husband Just Might Be Changing His Mind About The Divorce Find A Very Good Divorce Solicitor She Wants a Divorce, I Want to Get Back Together - Here's How