Pre-marital agreements might once have been the preserve of the rich and famous but, today, they're used by people from all walks of life. So, who should consider getting one and what are the benefits? Louise Masters, partner at Newcastle-based law firm Sintons, and a specialist in family law, explains more.
Traditionally, pre-marital agreements were something used by the wealthiest in society but in fact, I now recommend them to many of my clients.
Basically, if one person is bringing more wealth with them into a marriage than their partner – which can include property, cash or a business – they should consider a pre-marital agreement.
What does the law say about dividing assets on divorce?
When a married couple separates, there are two types of assets taken into account: matrimonial assets, which have been accumulated together for joint use, and non-matrimonial assets such as an inheritance by one person from a family member.
Matrimonial assets are jointly owned and divided between the two parties when they separate. There is nothing inherently unfair about one party seeking to preserve their non-matrimonial assets but there are some circumstances whereby these can be taken into account.
You might think a property you bought before marriage would be a non-matrimonial asset but in fact, if both people live together in the property, and it is regarded as the family home and therefore special to both, then the nature of this asset changes and will generally be shared equally upon divorce.
And cases where one or both parties run a business aren’t always clear-cut. We speak to lots of clients where a family business has been built up over generations. Even though a business can have existed for many, many years before the marriage, it could still be seen as partially a matrimonial asset, depending on the circumstances.
In addition, the needs of the parties trumps all else so that if there are insufficient matrimonial assets to meet both parties’ needs, then the Court can look to the nonmatrimonial assets to bridge that gap.
A safeguard against expense and heartache
Examples like these can catch people by surprise and cause issues that are tricky and expensive to unravel.
That’s why it’s best to get advice early on – at least six months before getting married – as an agreement can save you from stress further down the line.
Of course, no one goes into marriage thinking they’ll end up separating. But aside from saving you money and heartache if divorce does happen, a premarital agreement can also improve communication between partners and increase transparency within a relationship. It gives you certainty about the future and couples who do separate can remain on better terms if they’re able to avoid an acrimonious divorce. We also encourage parties to engage in the process of preparing a pre-marital agreement in a collaborative way, with meetings together to discuss matters and negotiate openly.
I would also point out that parties can consider a postmarital agreement, if say, one party receives a gift or inheritance during the marriage.
Legal agreements for cohabiting couples
The UK census shows more couples are choosing to live together without getting married or entering a civil partnership: the proportion increased from 20.6% in 2011 to 24.3% in 2021.
Even if you have no plans to get married, there are still ways you can protect your assets. I often advise couples to consider a cohabitation agreement which, like a pre-martial agreement, is a legal agreement setting out who’s entitled to what in the case of separation.
I see a lot of cases where couples disagree about entitlement to the property where they had been living. A cohabitation agreement can help avoid this issue and they’re becoming much more common.
A wise investment
It’s important to revisit any legal agreement between you and a partner regularly, to make sure it’s right for your current situation. This should be done every few years and definitely in the case of significant changes, like having children.
Ultimately, a judge has the final say on how assets are divided after divorce, but recent cases have shown that judges can and do uphold pre-martial agreements in the Family Court, so having such protection in place is a wise investment.
Find out more about Louise Masters and Sintons’ team of family law experts at www.sintons.co.uk