Is 'bank of mum and dad' new force in prenup popularity?
Following a report in the Daily Mail that the 'bank of mum and dad' is increasingly prompting grown-up children to sign prenups to protect their property investment, Maeve O'Higgins considers the use of prenups to ringfence "non-matrimonial" assets.
A recent article published on the Daily Mail website (here) highlights the increasing number of parents who are having to provide financial help to their adult children to enable them to get on the property ladder and are insisting on those adult children entering into prenuptial agreements to protect their investment from claims by their children's spouses on divorce.
The article also suggests that, as a direct consequence of the pressure exerted by parents on their adult offspring, there have been an increase in the number of people consulting family lawyers about obtaining prenuptial or postnuptial agreements (the legal consequences of both type of marital agreements are exactly the same).
It is undoubtedly true that there is more awareness about prenuptial agreements and in our family department we are receiving increasing numbers of enquiries from potential clients seeking advice about prenuptial agreements, including enquiries prompted by the parents of these individuals, or sometimes even the parents themselves, seeking legal advice about how a prenuptial agreement can protect family gifts against financial claims by the other spouse
In general terms a prenup or postnup is a useful way of ringfencing "non-matrimonial" assets, including funds gifted to one spouse by members of their family, or inheritances received by one or other spouse before or during the marriage.
Such agreements can also be very helpful to couples who have been married previously and who wish to preserve their pre-acquired wealth for the benefit of the children of their former marriage(s).
Where there are sufficient "matrimonial" assets (i.e. assets built up during the marriage rather than acquired prior to the marriage, or from an external source) left to meet the economically weaker spouse's financial needs for housing and financial support (taking into account their own financial resources) as well as the financial needs of any children in the event of a divorce, it is likely that ring fencing the non-matrimonial assets in this way in a prenuptial or postnuptial agreement will be effective to prevent financial claims against the non-matrimonial assets by the economically weaker spouse.
However, although The Law Commission has recommended that prenuptial agreements should be made legally enforceable (subject to certain safeguards), their recommendations have not been taken up and translated into legislation.
As a consequence, prenuptial agreements remain legally unenforceable in England Wales, so it is not possible to make a binding agreement which cannot be interfered with by the court in the unhappy event of a divorce.
In order to have the best chance of a prenup or postnup being upheld by the court on a couple's divorce, it is essential to observe accepted good practice. This includes both parties having independent legal advice about the agreement, both parties providing financial disclosure, allowing sufficient time for the discussions and negotiations leading up to the prenuptial agreement and signing up to it not less than 28 days before the wedding.
Both parties must enter into the agreement freely, understanding what they are signing up to and, above all, the agreement must be fair. The fairness or otherwise will be judged at the time of any breakdown of the marriage.
In order to try to ensure that the agreement remains fair with the passage of time and changes in family circumstances, some couples include provision for regular reviews of the agreement - say every 5 or 10 years -and/or on the happening of specific "trigger" events - such as the birth of children, inability of either spouse to work for medical reasons or redundancy.
Maeve O'Higgins Family Law Partner, Burlingtons Legal |
Email: maeve.ohiggins@burlingtonslegal.com, Tel: +44 (0) 207 529 5420
This blog is intended for general information only and should not be considered as giving advice in relation to any individual case nor be taken as applying to any particular case. No liability is accepted for any such use of the information contained.