Cheryl Fernandez-Versini has once again hit the headlines with news of her divorce. Rumours are now circulating that her husband is demanding a £3m pay out from her reported £15m fortune. This is often the result when an individual is vastly wealthier than their spouse. A pre nuptial agreement could have helped to protect Cheryl’s assets.
A pre nuptial agreement is made before marriage and is used to set out how two people will divide their assets in the event they divorce or separate. Assets accumulated both before and during the marriage can be included.
These agreements are becoming increasingly popular, especially amongst those who wish to ring fence certain assets to avoid having to divide them with their spouse in the financial proceedings of a divorce. For example, to protect an inheritance or to secure the assets acquired before the marriage. With modern divorce rates so high, many people see it as sensible, rather than unromantic, to plan for this. Just as we take out car insurance or other such insurance policies to cover the usual risks in life, we can enter into pre-nuptial agreements whilst of course hoping we will never need to rely on them.
Pre nuptial agreements are not automatically legally binding as the Court has overall discretion on how to distribute assets when one party applies for financial remedy following divorce. However, the Court recognises and gives considerable weight to them when they are properly entered into. The case of Radmacher v Granatino held that the Court will consider a nuptial agreement in the event that it is freely entered into, both parties have a full appreciation of its implications and that it is fair to hold the parties to the agreement. This means that any hint of pressure or deception will result in the Court giving little weight to the agreement.
In order to increase the likelihood the agreement will be effective, it is advisable to enter into the agreement well before the marriage takes place and ideally at least a month before the marriage. It is also very important that financial information is exchanged between the two parties. Each party should also have independent legal advice from a solicitor. A review clause should usually be inserted into the agreement, which is triggered by the passage of time or certain events occurring, such as the birth of a child or bankruptcy. This should ensure that the Court can be satisfied that it is still fair to hold the parties to the agreement, even after a life altering event.
It is estimated that 39% of marriages will end in divorce. With a contested financial settlement potentially costing tens of thousands of pounds, perhaps it might benefit you to consider a pre nuptial agreement. If you believe that you might benefit from entering into a pre nuptial agreement, please contact our family team on 01737 854500
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.