06 Apr 2011
Pre nuptial agreements: what next?
Catharine Bell, private capital partner, Lawrence Graham LLP:
"With all my worldly goods I thee endow - like a wife's promise to obey her husband, these words from the traditional marriage service may soon be an optional extra in wedding vows in this country.
"The Law Commission's consultation on the introduction of enforceable marital property contracts is closing to responses on 11 April 2011. This consultation and the recent high profile case on pre-nuptial agreements, Radmacher v Granatino, represent a significant cultural shift in our attitude in England and Wales to marital property agreements. It is now increasingly regarded as fair that an individual should be able to protect some of his or her property from the ravages of divorce.
"The Law Commission proposes that enforceable marital property agreements, if introduced, might be restricted to pre-acquired, gifted or inherited property and leave property acquired during the marriage available to meet the requirements of the other spouse on divorce. They suggest certain restrictions, most importantly a proviso that any agreement could be varied or set aside by a court to the extent it failed to meet the needs of any children of the family or might leave one or both parties dependent on State benefits, assuming that could otherwise be avoided.
"Whatever the outcome of the consultation, marital property agreements are now firmly on the agenda, particularly for the internationally wealthy. All legal and financial advisers and professional trustees will need to include pre- and post-nuptial agreements in their armoury of estate planning tools and must not be squeamish about raising the topic with their wealthy clients. Every time a marriage is contemplated, a will drafted or a divorce considered, the "pre-nup" will be significant, either for its presence or absence.
"In light of all the uncertainties in the tax world at the moment, an opportunity to create some certainty over their property can only be a good thing for the wealthy individual and, as such, it is to be hoped that the results of the Law Commission consultation are available soon."