Preserving family wealth with a prenuptial agreement: how best to protect farming assets on a divorce

21 May 2019

Recent years have seen pre-nuptial agreements move from the world of the super-rich to being a tool many now consider in advance of marriage. In this blog, which was first published in Farmers Weekly, Abby Buckland sets out how they are viewed by the courts and how to correctly set up such an agreement.
 

The aim of a pre-nuptial agreement is to reduce disputes on a divorce and it is often parents who push for a pre-nup to be made.

These agreements have particular appeal to farming families because they offer a way to preserve wealth and ring-fence assets that have been in a family for generations.

How to make your agreement capable of being upheld

They can help prevent a situation where it is necessary to sell all or part of the farm, or to split it 50:50, which is the usual rule of thumb for asset division in divorce.

The Supreme Court case of Radmacher v Granatino nine years ago was pivotal for giving legal effect to a pre-nuptial agreement and shifted the balance in favour of upholding them.

Unlike in other jurisdictions (including Scotland), pre-nups are not binding in England and Wales. Judges have a degree of freedom when deciding whether to uphold one in whole or in part.

However, the courts are heavily influenced by the existence of a properly implemented pre-nuptial agreement and view it as a demonstration of the intention of the parties.

Individuals often worry about how to introduce the topic of a pre-nuptial agreement. In our experience, it helps to make clear that its purpose is to preserve a farm for future generations.

The majority of cases where pre-nuptial agreements have not been upheld in the past nine years have been where the court has felt that one or more of the factors below has not been satisfied:

1. Make it fair

The court will struggle to uphold an agreement that it considers to be unfair – for example, where one spouse would be left in a predicament of real need.

The agreement must provide for the financial needs of the wife (and it is usually the wife) and children, even if the provision is some way below what the husband will retain and what the court would have awarded in the absence of a pre-nuptial agreement.

2. Disclose your assets

The question of disclosure tends to be case specific. However if there is a material lack of disclosure and information, for example a failure to provide a full summary of finances and, if requested, underlying documents and valuations, you could fall short of what a court would expect.

3. Independent legal advice

Both parties should receive independent legal advice. The court must see that the financially weaker party has a full appreciation of the implications of the agreement they are signing and what they are giving up by signing it.

4. There must be no duress

Both parties need to be seen to enter into the agreement by their own free will. The presence of any duress, fraud or misrepresentation will negate the agreement and make a judge less likely to uphold it, if challenged.

5. Make arrangements in good time

The agreement should be signed in good time before the wedding (at least 21 days prior), otherwise a party may successfully persuade a court that they were pressured into signing.

6. Cater for children

A pre-nuptial agreement cannot allow a party to contract out of an obligation to maintain their children and the agreement will not be allowed to prejudice the reasonable requirements of any child.

It is therefore essential that the needs of any (future) child(ren) are catered for in terms of the agreement or left open, to be dealt with fairly at the time the agreement is put into effect.

Pre-nups in brief

  • There is no “off the shelf” pre‑nuptial agreement.
  • Each pre-nup document is personal to those who sign it and caters for their specific wishes and needs.
  • Legal costs to draft one can range from £1,500 to £15,000, depending on the level of agreement involved.
  • The more you can agree before you start the drafting process, the less expensive it will be.
  • It is advisable to have wills that mirror any pre-nuptial agreement for a belt-and-braces approach.

This blog was first published in Farmers Weekly in April 2019.

Further information

If you have any questions about nuptial agreements or protecting your assets on marriage or re-marriage, please contact a member of our family team.

You may also be interested in reading our other family law blogs for further information.

About the author

Abby is a senior associate in the family and divorce team. She undertakes matters involving all aspects of private family law and in particular complex financial issues and private children cases.  She regularly acts in family and divorce cases and has lectured on the topic at conferences.

Abby has been named twice as an Associate to Watch by Chambers UK and has been included in Legal 500 2018 and 2019.

Choose a specialist area:

Farming and Divorce

Farming divorces are unique, fact specific and often involve highly charged emotions - and it is essential that the correct strategy is adopted from the outset. We have considerable experience of farming divorces and the difficulties these cases can present.

Farms and Estates Disputes

Family farms and landed estates often fall front and centre in inheritance disputes and we have considerable expertise in representing clients in these types of matters.

Prenuptial Agreements

Prenuptial agreements are increasingly being upheld by the Courts and it is essential that you sign up expecting to be bound by it. If you are being asked to sign an agreement, you will need to understand the rights you are giving up by entering into it.

Postnuptial Agreements

Many couples also choose to have a postnuptial agreement when they are relocating to the UK and at least one out of the couple want to protect their assets in the event of a future English divorce. We regularly advise clients in relation to postnuptial agreements, whether freestanding or following a prenuptial agreement or foreign marriage contract.

Reconciliation Contracts

A reconciliation contract is a form of post-nuptial agreement which can allow couples to put their marriage back on track whilst at the same time prescribing in advance the terms of a split if the reconciliation fails.

Wills, Succession Planning and Trusts

Many of our clients have complex business structures, high value real estate or other assets which necessitates careful planning.

Considering Divorce or Separation

Considering divorce or separation is stressful and affects people in different ways. Our experienced family lawyers will listen and discuss the options with you.

Financial Arrangements

The majority of divorces and separations involve consideration of the family's financial arrangements. Our lawyers are highly regarded for their ability to give practical and clear advice on the financial implications of relationship breakdown.

Share insightLinkedIn Twitter Facebook Email to a friend Print

Email this page to a friend

We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

Leave a comment

You may also be interested in:

Close Load more

Let us take it from here.

+44 (0)20 7814 1200

enquiries@kingsleynapley.co.uk

Skip to content Home About Us Insights Services Contact Accessibility