Question – what do the following celebrities have in common – Mel Gibson, Russell Brand and Kenny Rogers?
Answer – all three had to pay millions to their ex-spouses following their divorce because they did not have a prenuptial agreement in place.
Although pre-nuptial agreements may seem unromantic, for high-net-worth individuals, they provide a sensible option for protecting wealth, especially for those who may be marrying for the second or third time.
The Unromantic Reality of Divorce Without a Pre-nup
Pre-nuptial agreements, or “pre-nups” as they are commonly known, is a contract between the parties to an intended marriage or civil partnership that seeks to regulate their affairs in the event that their relationship ends. For the majority, financial arrangements will be the main focus of such agreements, but the parties may also agree in what jurisdiction their divorce or dissolution suit will proceed
One of the main objections to pre-nuptial agreements (or pre-partnership agreements in the case of a civil partnership) is that they are unromantic. After all, no one enters a marriage believing it may end someday. However, when you consider some of the sums celebrities who listened to their heart instead of their lawyer have had to hand over to a person they no longer want to be with (and in many cases openly despise), if you are against the idea of pre-nups, you may start to entertain the benefits of them:
- Madonna and Guy Ritchie – currently in a custody battle over their son, Rocco, who refused to return to New York to live with his Mother when the couple divorced in 2008. Madonna, who was worth an estimated £351 million at the time was forced to give her estranged husband £65 million as she never signed a pre-nuptial agreement.
- Rosanne Barr and Tom Arnold – talk about love turning sour. After a whirlwind romance, comedy giant, Rosanne Barr, married comedian Tom Arnold in 1990. Rosanne was so head over heels that she fired her lawyer when he suggested that she make Tom sign a pre-nup. Fast-forward to 1994, Rosanne must have regretted that decision when Arnold walked away with around £35 million of her fortune.
- Paul McCartney and Heather Mills – Despite everyone urging him to sign a pre-nuptial agreement with Heather Mills, Sir Paul decided that love would conquer all and married her without one. She walked away with £25 million, and Sir Paul admitted that marrying her was one of the worst mistakes of his life. Ouch!
If you are wondering whether you need a pre-nuptial agreement or not, then ask yourself the following:
- Do you have property, a business or assets that you acquired before meeting your fiancé?
- Do you have children from a previous relationship who you want to preserve your assets for?
- Have you been married before and lost part of your wealth in the financial settlement?
- Is it important that you can choose the jurisdiction a possible divorce would take place in?
- Do you have business partners and/or shareholders that may be adversely affected by a protracted and complicated divorce settlement in the future
Are Pre-Nuptial Agreements Worth the Paper They’re Written On?
Are pre-nuptial agreements in the UK enforceable? That is the million-dollar question. As the law stands at the moment, pre-nuptial agreements are not formally binding in England and Wales. Pre-nuptial agreements have been described by the court as ‘persuasive’ and even ‘decisive’ when weighing up the outcome of an application for a financial remedy, either as part of all the circumstances of the case that the court has a duty to consider, or as conduct it would be inequitable to disregard.
In 2014, The Law Commission made a recommendation that both pre and post nuptial agreements should be made legally binding so long as:
- both parties to the agreement receive independent legal advice, and;
- both parties make a full disclosure regarding their financial position, and;
- the agreement was made at least 28 days before the wedding or civil partnership
Pre-nup or post-nup?
A pre-nuptial agreement is made prior to the wedding or civil partnership. A post-nuptial agreement is created and signed after the marriage has taken place. Examples of where a post-nuptial agreement can be used include:
- you have agreed to give your marriage, ‘one last go’; therefore, divorce is a high possibility
- one of you has come into a trust fund or inheritance
- your pre-nuptial agreement mentions child care issues
- one of you did not receive legal advice before signing a pre-nup
- you were drunk when you signed the pre-nuptial agreement (it happens more often than you may think)
- The Argument Against Pre-nuptial agreements
Many pro-marriage groups are against pre-nuptial agreements, and their arguments do raise valid points. Some state that if a marriage is unhappy, a couple has a choice – either to work on the relationship or walk away. Having a pre-nuptial agreement may make it easier to seek out greener pastures they argue, rather than put in the hard yards required to rebuilding the relationship. Others comment that pre-nuptial agreements can never be truly fair, as one party is always in a stronger financial position, (which is why they want a pre-nup in the first place). Therefore, there is always an element of coercion in every pre-nuptial agreement.
Whether you agree with them or not, people are now marrying later, or marrying for the second or third time, and they naturally want to protect the assets and wealth they have created as in independent individual.
They may not be romantic but neither is divorce; they are however practical and offer protection to separating parties. If you are getting married and want to protect your best financial interests, it is worth considering creating a pre-nuptial agreement.
Better safe than sorry.
Rosie Bracher are specialist family law solicitors based in Barnstaple. We have the knowledge and expertise to advise you on drafting, negotiating or signing a prenuptial or post-nuptial agreement. Please contact our office on 01271 314 904 and arrange to speak to one of our team.