According to a leading bridal magazine, the average amount spent on a wedding in the UK in 2018 was nearly £18,000. With so many things to think about and plan for, it is easy to ignore the issue of a prenuptial agreement, particularly if you do not consider yourself to be among the super-rich. Sadly, the Office of National Statistics estimates that over 40 per cent of marriages will end in divorce.
‘This is a risk that every couple needs to take seriously, particularly if they have any involvement in a family business,’ says Angie Brown, family solicitor with Mooney Everett Solicitors in Ormskirk, Lancashire. In this cautionary (and fictional) tale, Angie looks into a crystal ball for a couple who had reservations about making a prenuptial agreement.
Patty met Phil at university and they married soon after graduating, moving to live with Patty’s parents on the family farm before having three children. Patty took over running the farm about six years ago, something which was always in the pipeline. Her parents gifted her the farm land and outbuildings. Patty is the third generation to run the farm and it is hoped that the farm will pass on to the fourth generation in the future.
After 25 years of marriage, their relationship has broken down and Patty and Phil are about to apply for a divorce. Alongside concerns about the wellbeing of their children, Patty and her parents are worried about how the financial assets will be divided. Aside from the emotional upset over any potential erosion of the family legacy, it would be almost impossible to sustain a living if the farm was split or a part had to be sold.
Phil’s solicitors advise him that he is entitled to seek 50 per cent of the marital assets, including the farm. Without a prenuptial agreement, Patty and Phil find themselves in the midst of lengthy, expensive and bitter legal proceedings.
Litigation takes months and then years to conclude and costs mount up. As well as legal costs, there are professional costs for accountants and surveyors to pay for valuations of the farm assets and the operating business. As there is land and buildings with the potential for development, then other professional fees are incurred too.
Phil wishes to move away from the area and start a new life, but is unable to do so while there is such uncertainty over his financial standing. The farm business also starts to suffer with the uncertainty and lack of cash investment for improvements.
It would all have been so different if they had entered a prenuptial agreement.
Much like life insurance, a prenuptial is something that you hope you will never need to use, but it can be of great benefit to your family’s future if it is required. The main aim of a prenuptial agreement is to set out clear expectations of what each spouse will be entitled to in the event of divorce. The agreement allows a couple to agree to deal with pre-marital assets and assets that are inherited or gifted solely to one party of the marriage (non-matrimonial assets) in a different way to assets that are jointly owned or acquired during the course of the marriage (matrimonial assets).
If Patty and Phil had entered a prenuptial agreement, it would be possible to deal with the farm in a different and separate way to the rest of the assets. This would provide certainty for the couple, and the next generation who wish to continue running the family farm.
In England, prenuptial agreements are highly persuasive if drawn up properly and well in advance. They can be used for couples intending to marry or enter a civil partnership.
If you are browsing wedding magazines and making a list of things that you need to organise, then don’t forget to make an appointment with a solicitor to discuss a prenuptial agreement.
You might feel awkward raising the subject now, but it can save a lot of heartache and acrimony later if you find yourself contemplating divorcing and the division of your assets. A prenuptial agreement also allows spouses to remain on more civil terms with each other after separation, which can benefit any children immensely. It can also save you both on future legal costs and help you move on faster after divorce.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.