Nuptial agreements need to meet certain criteria to be valid
If you’re thinking about a nuptial agreement, there are a number of factors to consider.
This includes what might happen to existing assets, such as homes or businesses owned by one partner. You also need to look at future wealth gain, such as inheritance money, both for the partner in question and any existing children.
Including details about children ‘goes to the heart of the transparency of the agreement, as it makes sure that both parties are entering into the agreement knowing exactly what their respective obligations and financial commitments are,’ explains Thomas Browrigg, partner at the law firm Goodman Ray.
However, in order for the agreement to be valid there are certain conditions that must be met.
‘For example, if the agreement is signed too closely to the date of the marriage (either before or after), unfair pressure is exerted by one party over the other, or a party does not take legal advice – although this will not automatically make the agreement void – it could all arise in the agreement being rejected in court,’ explains Claire Filer, partner at the law firm BP Collins Solicitors.
When making an agreement, she says, ‘it should be signed with the benefit of full and frank disclosure of each other’s capital and income resources and therefore that information should be put together at an early stage.’
A life insurance policy can be added to an agreement
Life insurance policies are designed to protect your loved ones, but if you have a joint life insurance policy or a joint annuity this can cause confusion in the case of divorce.
With nuptial agreements, it is possible to include life insurance policies and to state what will happen with the death benefits of a policy.
These agreements only become relevant when a marriage breaks down. At that point, it requires ‘a court to approve a financial settlement that was entered into in good faith before the marriage broke down,’ explains Thomas.
It’s possible to protect an existing policy and ‘if you have a life insurance scheme with a surrender value, this can be divided up with other capital assets, while you can also include provisions upon divorce for one or both parties to maintain a life insurance policy post-divorce,’ he adds.