Predicted Boom In Divorces Following No-Fault Divorce Legislation Means Couples Should Act Now To Protect Their Assets
Pre and post-nuptial agreements should take centre stage so that couples can protect their assets as no-fault divorce legislation looms closer, specialist family lawyers are warning.
A pre-nup is a mutual agreement between a couple that establishes each’s rights to any income or assets in the marriage. A similar agreement that takes place after the marriage is a post-nup. Both are used so that if the couple divorces, any acrimony can be settled with an agreement that was made before any relationship breakdown.
Pre and post-nups are not technically legally binding documents, but add great weight to a judge’s decision when deciding on how income/assets should be split in a divorce and as long as both parties have had independent legal advice, the document has been properly drafted and is fair, the Judges want to try and uphold them.
There were 90,871 divorces of opposite-sex couples in 2018 – yet expert lawyers say it is still the norm for people to split without a pre or post-nup in place – meaning that even if no-fault divorce legislation comes into force later this year, couples may still end up fighting over their assets despite wishing to remain friendly.
Irwin Mitchell’s specialist family law team is also explaining to couples who are already married that it’s not too late to consider how they may protect their income/assets by entering into a post-nup.
The Divorce, Separation and Dissolution Bill – which will make no-fault divorce an available option in law if successful – is currently passing through the House of Lords with the second reading due in February.
Expert Opinion“Divorce rates are at their lowest ever, but if no-fault divorce legislation comes into effect this year we’re likely to see a boom in divorce as couples have been holding off initiating divorce proceedings expecting to be able to separate in a more harmonious way.
“This means pre-nups, and in particular post-nups, will become more important than ever in 2020 as a way of couples reaching an agreement before a relationship breaks down. They might not be the most romantic option, but they can certainly make an already distressing time a lot smoother.
“People might also think pre and post-nups are just for the rich and famous, but they are useful for anyone that has assets – or in less technical terms something like a business, any property and even pensions. This is particularly true for older people getting married who may bring more financially to the relationship than younger people tying the knot.
“A sensible discussion about the income and assets the couple has and how they may be shared in the unfortunate circumstances of a separation can avoid further heartache and potentially lengthy legal battles in the future.” Zahra Pabani - Partner
Pre-nups are becoming even more important with the rise of second and third marriages, which can create complex family arrangements. They can also help protect inheritances for any children involved in marriages, particularly where there may be children from other relationships involved too.
Zahra continued: “Realistically, any person looking to remarry should be seriously considering a pre-nup. Some couples may have their own individual business interests and wish to keep them separate, even if they have some joint bank accounts and share most of their finances.
“Post-nups in particular can also be used to complement tax and inheritance planning arrangements, proving useful, if other family members are gifting sums of money, property or business interests to one party in the marriage; or if parties enter into tax planning arrangements and are setting up trusts.”
Although courts still determine whether a pre or post-nup should be relied upon, with good legal advice for both parties and adherence to certain principles, they can form an integral part of financial planning for the future.