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14/10/2021

The importance of Pre-Nuptial Agreements in wealth protection

Pre nuptals and Wealth Protection

Often when a couple are due to embark on married life with their partner, the last thing they wish to discuss is what would happen should the relationship break down.

However, having these conversations, and recording their intentions in a Pre-Nuptial Agreement, can not only save them and their families from expensive and stressful future litigation, but can also provide peace of mind that their, and their wider families’, financial assets are protected in the event that the marriage comes to an end. 

Pre-Nuptial Agreements can be particularly attractive in cases where there is significant pre-marital or family wealth, family businesses, or where there are children from a previous relationship.  They are also a useful tool for individuals who seek to preserve wealth for future generations.

Marriage breakdown can pose a significant risk to a family or individual’s wealth and can be hugely expensive and disruptive to the couple themselves and their families. 

It also has the potential to cause significant disruption to the running of and operation of family businesses (in instances where injunctions and freezing orders are granted), and for third parties and other family members to become embroiled in the proceedings if they themselves have a financial interest in assets owned or controlled by the parties.

A Pre-Nuptial Agreement (or a Post-Nuptial Agreement, if entered into after the marriage) is a legal agreement setting out how the parties’ assets are to be divided upon separation or divorce.

They can mitigate the risks set out above and provide financial assurance to the couple and their families, and to a certain extent, can exclude (or ringfence) pre-marital assets, gifts, inheritance, family business interests and family wealth. 

Pre-Nuptial Agreements are effective in ensuring that fair provision is made for the financially weaker party, while at the same time preserving the other party’s assets and family wealth for themselves and the next generation.

When properly drafted, Pre-Nuptial Agreements can provide the parties and their wider families with certainty about the financial consequences upon divorce.  So long as certain criteria are met, the Courts are likely to uphold the content of the agreement and its terms will be enforced upon divorce.

Family matters such as this can be highly emotive and it can be difficult for the couple involved to have these discussions, or for another family member to suggest that the couple should consider protecting their own (or their family) assets. 

Receiving specialist advice and implementing a collaborative approach is of paramount importance in ensuring that the couple and the wider family understand the advantages of having an agreement put in place.

Nuptial Agreements are an essential tool for wealth planning. At Thursfields, our family law team work collaboratively with our private client, corporate and property teams, to ensure that a holistic approach is taken to all aspects of wealth protection for our clients.

Contact us on 0345 20 73 72 8 or info@thursfields.co.uk

Laura Williams Associate director wealth protection & family law

Laura Williams,

Associate Director, Wealth Protection & Family Law

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