A guide to prenuptial agreements by Melissa Lesson from Mills & Reeve
The area of prenuptial agreements is complicated. In our latest Professional Services feature, Melissa Lesson who is a barrister and partner in the Mills & Reeve London Family department, answers some of the typical questions about prenuptial agreements.
A dual French and English national, Melissa Lesson speaks both French and Italian. Her client base is very international, with a particular francophone angle and she often works with lawyers in France and Italy on cases with assets in multiple jurisdictions.
Melissa Lesson specialises in all financial aspects of separation and divorce, and the consequences that follow, such as child arrangements. She also works on wealth preservation and international pre-nuptial agreements.
Question: Why are pre-nuptial agreements increasingly popular among high-net-worth individuals?
Pre-nuptial agreements, commonly known as “pre-nups”, have gained significant traction in recent years, particularly among high-net-worth individuals. Whilst they have always been commonplace in Europe and the United States, they have been less so here. It is only in recent years, since the judiciary have provided clearly defined criteria, and in the knowledge that they should, if properly entered into, be upheld by the Court, that more people are entering into them in England. There is a desire to protect one’s assets and ensure financial security in the event of a divorce. The pre-nup outlines how assets will be divided and how financial matters will be handled if the marriage or civil partnership ends; this can include a wide range of assets such as properties, investments, businesses and even inheritances.
One of the key benefits of a pre-nup is that it provides clarity and certainty. In the unfortunate event of a divorce, having a pre-nup in place can significantly reduce the emotional and financial strain that often accompanies the dissolution of a marriage. It allows both parties to have a clear understanding of their financial rights and obligations, which can help prevent lengthy and costly legal battles.
Moreover, pre-nups are not just about protecting wealth; they also serve to safeguard family legacies. For individuals with substantial generational family assets or businesses, a pre-nup can ensure that these remain within the family and are not divided or sold off during a divorce. This is particularly important for those who wish to preserve their family’s heritage and ensure that future generations can benefit from these assets.
Question: What are some common misconceptions about pre-nuptial agreements, and how can they be addressed?
There are several misconceptions about pre-nuptial agreements that often deter couples from considering them. One common misconception is that pre-nups are unromantic and indicative of a lack of trust between partners. However, this perception has shifted significantly. Today, many view pre-nups as a sensible and proactive measure, akin to insurance. Just as one would insure their home or car, a pre-nup is a way to protect one’s financial future. It’s important to understand that a pre-nup is not about anticipating the end of a marriage, but rather about planning for every possibility and ensuring that both parties are protected.
Another misconception is that pre-nups are only for the wealthy. While it’s true that high-net-worth individuals often have more complex financial situations that can benefit from a pre-nup, these agreements can be valuable for anyone who wishes to protect their assets and ensure financial security. Pre-nups can be tailored to suit the specific needs and circumstances of each couple, and this flexibility makes pre-nups a valuable tool for anyone, regardless of their financial status.
Question: How can high net worth individuals ensure that their pre-nuptial agreements are enforceable and effective?
To ensure that a pre-nuptial agreement is effective and likely to be upheld, it’s crucial to follow certain guidelines and seek professional legal advice. Firstly, both parties should fully disclose their assets and liabilities before entering into the agreement. Transparency is key to ensuring that the pre-nup is fair and equitable. Secondly, both parties must receive independent legal advice. And thirdly, the agreement should be entered into voluntarily, without any coercion or undue influence, and so ideally it should be signed at least a month before the wedding, to ensure that there has been ample time to consider and understand the implications.
It’s also important to have the pre-nup drafted and reviewed by experienced family lawyers who specialise in pre-nuptial agreements. They can ensure that the agreement complies with legal requirements and addresses all relevant issues, including seeking input from lawyers in other jurisdictions if necessary, to ensure that it will be recognised in more than one country. Additionally, the pre-nup should be regularly reviewed and updated to reflect any changes in the couple’s financial situation or circumstances. This can help prevent disputes and ensure that the agreement remains relevant and effective.
In conclusion, pre-nuptial agreements are a practical and forward-thinking approach to marriage, providing financial security, protecting family legacies, and offering peace of mind. As more high net worth individuals recognise these benefits, the popularity of pre-nups continues to rise.
