Jet Set and Match: how the other half pre-nup

"Money is not the most important thing in the world. Love is. Fortunately, I love money.”

Comedian Jackie Mason astutely observed the trade-off that can arise when money and love clash. We all want to believe love will prevail, but family lawyers everywhere will raise a wry eyebrow knowing that, for a few, money remains the most important thing. It can be a dilemma therefore when a rich person wanting to preserve wealth also feels the pull of marital ties. They want to marry, but don’t want to risk losing their money, and so will need to find the courage to whisper: “pre-nup?” to their beloved. If they are lucky, they may get an “I do” in return.

By virtue of saying “I do”, spouses have claims against one another for income, capital, property and pension in life and on death pursuant to the Matrimonial Causes Act 1973. Put more simply: you are all in before the cake has even been cut. As one client bitterly complained to me years ago: “No-one explains that bit when they read the banns”. No, they do not. Pre-nuptial agreements are designed to try and limit, or safeguard against, a spouse exercising the fullest extent of marital claims upon divorce.

While pre-nups are not the exclusive preserve of the rich, they are more commonly seen where there is a significant disparity of wealth. Pre-nups offer an opportunity to record what each person brings to the marriage, and/or might acquire during the marriage, in an effort to ring-fence it upon divorce. Pre-nups are not (yet) legally binding in England and Wales, but are of evidential value in a divorce. If a couple have bothered to go to the effort of formally agreeing with lawyers how they might divide their assets upon divorce, a judge cannot casually disregard this. So what are the essentials that a couple think about when considering a pre-nup?

  1. Appreciate that money can’t buy you time. A pre-nup requires proper planning. This should start months, not weeks, before the wedding. A pre-nup should not be signed any later then 28 days before the wedding ceremony if allegations of coercion or undue influence are to be avoided. It is sensible to have lawyers working parallel to the wedding planners.
  2. Relish your independence. Despite a couple agreeing the principles of a pre-nup, independent legal advice is a must. Each half of the couple must properly understand the rights they acquire upon marriage and surrender within a pre-nup. This can lead to conflicted interests, which is why one lawyer can’t advise the couple. Independent advice does not need to be (because it should not be) an adversarial process, particularly given the pending wedding; a good lawyer will steer the negotiations in a constructive way.
  3. Your place or mine? Think about nationalities and jurisdictions, and where home may be now and in the future. This is essential to understanding how many jurisdictions the pre-nup may have to cover. If one half of a couple is English and the other, say, American the pre-nup ought to consider both jurisdictions as it could later need to be enforced in either country. If the couple intend to settle in another country, that will be a third jurisdiction to consider. While infinite jurisdictions cannot easily be covered off, the obvious ones should be referenced.
  4. How many lawyers does it take to draft a pre-nup? Answer: more than you might think. Where multiple jurisdictions are involved, lawyer/attorney input from those jurisdictions will be necessary. The requirements of a pre-nup (and consequent enforceability) vary country to country, often state to state too. Seeking input from a different jurisdiction is logical and protective, and enhances the validity of the pre-nup.
  5. Count the zeroes. There must be full and frank financial disclosure by the couple before the pre-nup is signed. This so that the couple fully understand what is at stake and, again, what is being acquired and surrendered. Check disclosure requirements in different jurisdictions because these can vary significantly. The more transparent the couple are with each other, the more weight may be given to the pre-nup. Also, literally count the zeroes. I once had to write on a Post-It the figure I was looking at so I could insert commas and establish it was £500m. I had thought it a trifling £50m.

Done right, pre-nups can be as relevant and valid as other legal documents such as Wills or trust deeds. You hope never to have to refer to them, but there is a comfort for some in knowing they exist. For the super-wealthy, I leave the last word to Steve Martin: “I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”

Expert
Georgina Rayment
Partner, Head of Family, Mediator