A recent divorce case has illustrated the value of pre-nuptial and pre-civil partnership agreements. Sarah Crilly, Partner in the Family Law team at Ward Hadaway, has more.
In a recent High Court divorce case, a Russian billionaire was ordered to pay his wife £453m. The award was intended to reflect 41.5% of the total marital assets.
This was a long marriage and therefore the principle of equal sharing applied. However, the husband did claim to have brought significant wealth to the marriage and that he had made a “stellar” contribution but the Judge rejected any special contribution arguments saying they were both equal.
The reason the percentage was not 50% precisely was not that the court believed the wife had given less of a contribution but rather the nature of the assets being divided some being liquid and some illiquid.
The court did acknowledge that the husband had been extremely generous to the wife but that counted for very little.
This case highlights how parties getting married should consider how they may wish to ring-fence certain assets and protect their positions by giving consideration to a Pre-Nuptial/Pre-Civil Partnership Agreement when planning their future. This is the case even when the sums involved are not as large.
A Pre-Nuptial Agreement is a contract entered into by a couple prior to marriage/civil partnership which sets out which party owns, or will own, certain assets on any future breakdown of the relationship.
It will usually define “matrimonial property” and “non-matrimonial property” or “joint property” and “separate property”. Matrimonial property usually includes assets acquired during the marriage and assets held in joint names, such as the matrimonial home or joint bank accounts. Non-matrimonial or separate property usually includes assets owned before the marriage, inherited assets or gifts received by one party during the marriage.
The Agreement can also deal with income, such as treatment of earnings and interests under trusts.
Likewise, couples who are already married or in a civil partnership may wish to give thought to entering into a Post-Nuptial/Post-Civil Partnership Agreement. It will work in the same way as a Pre-Nuptial/Pre-Civil Partnership Agreement and there is no difference in its legal status.
These Agreements have a number of key advantages. They give both partners certainty and are a sensible form of wealth protection.
If you have either inherited or been gifted property from family members or simply have acquired your own property portfolio before meeting your partner, it makes sense to consider what you wish to happen if you later divorced. The Agreement could also detail how the parties arrange their finances during the marriage.
It will also help to reduce legal fees as the issues for the court will be clearer and narrower in the event of a divorce.
While it is not currently possible to exclude the jurisdiction of the Court in dealing with the breakdown of a marriage where there is a Nuptial/Civil Partnership Agreement, the Court will take an Agreement into account as a consideration, providing the Agreement meets a number of key requirements.
So while signing a Nuptial/Cohabitation Agreement will not feature in your typical romance novel, giving consideration to one is a sensible notion for any couples considering taking their relationship to the next step.
