Five Practical Considerations for entering into a Pre-Nuptial Agreement

Melissa Lesson, Partner at law firm Mishcon de Reya LLP, gives her advice on seeking a pre-nup, including in complex, multi-jurisdictional cases involving significant assets.

 

1. Speak to each other

This may seem obvious, but I come across many clients whose first sight of the contents of the proposed Pre-Nuptial Agreement is through lawyers. This can be very distressing for them, especially if the proposed terms are not what they anticipated or would have imagined. You are getting married – you need to be able to communicate, even on difficult and unromantic topics such as this!

 

2. Be fair

I often see the financially stronger party (especially if they have been divorced before) seek to ring-fence as much of their wealth as possible, sometimes in its entirety. This may be understandable for a number of reasons, but it is likely to leave a bitter taste in your fiance(e)'s mouth (in some extreme cases leading to the wedding being called off). If there is a dispute in later years in the context of a divorce, the Court can set aside a Pre-Nuptial Agreement that it considers to be 'unfair'.

 

3. Be open

Both sides are obliged to provide a summary of their financial disclosure which is then attached to the Pre-Nuptial Agreement, so that both can be satisfied that they are entering into the agreement with their eyes wide open. Quite apart from the fact that it makes sense that you should be entering into marriage being open with your fiancé(e), not disclosing assets, or attributing a deflated value to them, will ultimately prove to be a disservice and will enable your future spouse to argue at a later date that the Pre-Nuptial Agreement should be set aside.

 

4. Plan ahead

It is often the case that the financially weaker party feels under enormous pressure to enter into the Pre-Nuptial Agreement, especially if it has been instigated by the 'in-laws', and is being negotiated shortly before the wedding day. Make this something that you sort out and finalise way ahead of the other wedding arrangements, so that you can all move on and concentrate on the wedding itself. This will also help in that, in the event of a divorce, no-one at a later date can suggest that the Pre-Nuptial Agreement was entered into under duress, with a 'gun to the head'.

 

5. Consider foreign legal advice

If there is a realistic prospect that you will not be living in England for the foreseeable future, a lawyer from the country in which you intend to reside must input into the drafting of the Pre-Nuptial Agreement. Sometimes it will be a case of them adding wording that will enable the Agreement to be valid in that country, or it may require a separate Agreement to be drafted at the same time. If you have no plans to live abroad, but in fact in later years do move to live in another country, it is imperative that in the same way that you will seek tax advice and so on in that new country, that you seek advice as to the contents of your Pre-Nuptial Agreement and ensure that it would be considered valid and enforceable in that country. 

 

It is a common problem when people are getting divorced in the UK. A client who is not English, whose spouse is not English, who married in another country and entered into a Pre-Nuptial Agreement there (often simply the tick box election of a Matrimonial Regime in many of the European countries who follow the Napoleonic Code) and believe (wrongly) that they are protected when divorcing here. They are not and the Courts will adopt English law with a starting point of a 50-50 division of the assets. There have been less than a handful of cases recently where foreign Pre-Nuptial Agreements have been upheld by the English court; the tide may be starting to turn, but not such that you can afford to be complacent.

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