Second marriages: Preserving wealth for your children
The recent article in the Guardian entitled My wife wants to protect our children's inheritance if I remarry after her death focused on how spouses can preserve their wealth for future generations. The question was posed in the context of making a Will, but it is a valid question to consider in terms of pre and post-nuptial agreements too. These operate in the event of separation and divorce, and also potentially death in the event that a separation or divorce was on the cards when the agreement was made.
Frequently, it is the parents or grandparents of the would-be bride and/or groom spouse who persuade the couple to have a pre-nuptial agreement so that they feel comfortable passing on wealth down the generations. Similarly, a married couple may find themselves being encouraged by their parents or grandparents to enter into a post-nuptial agreement for the same reasons. The legal fees for such agreements are often met by the older relatives prompting such marital agreements being prepared.
The terms of the pre or post-nuptial agreement in such circumstances commonly make provision for any assets, income or inheritance received by one spouse from his/her side of the family only to be retained by him/her solely, and for this to be kept out of any division of assets upon any later separation or divorce. The law now in relation to such marital agreements is that they will be in all likelihood binding so long as certain criteria are fulfilled, and so long as they do not leave one party in a predicament of real need. The court retains its jurisdiction to have the final say if such an agreement is challenged, but current case-law suggests the circumstances for doing so are now fairly limited.
The Law Commission in 2014 recommended the following conditions for an agreement to be a “qualifying nuptial agreement”, and therefore very likely to be upheld:
- For those signed before the wedding, they must be signed at least 28 days before the marriage or civil partnership;
- There must be no undue influence;
- It must be properly executed, i.e. it must be in writing and made as a Deed;
- It must contain a statement signed by both parties that he/she understands it is a qualifying nuptial agreement;
- There must be financial disclosure; and
- Both parties should obtain their own independent legal advice.
Whilst the above Law Commission proposals have not, yet, been made law, it is wise to follow the recommendations to give as much weight to the agreement as possible.
For further information please contact the Blake Morgan Family team if you have any questions about pre-nuptial agreements.