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Preserving multi-generational family wealth on death and divorce
Abby Buckland
The experience of divorce can be painful, expensive and damaging on many levels. When clients approach us to embark on the process, we always invest time at the outset exploring whether divorce is the only way forward. Sometimes, pressing pause and working to get the relationship back on track with renewed resolution can be an alternative worth exploring.
If couples can agree on resolving areas of tension that ultimately might save a marriage, a reconciliation contract could be an option. It is a form of post-nuptial agreement that sets out new relationship commitments whilst at the same time prescribing the terms of a split if the reconciliation fails. It can include promises of how you each will reform behaviour, e.g. addictive or adulterous behaviour, and you can also agree financial terms if the marriage should ultimately fail, e.g. how property and pension pots should be divided.
Although a fairly new concept in the UK, reconciliation contracts are have been used in the US for some time. We regularly advise clients of the option of a reconciliation contract, often in tandem with therapeutic support, and we believe it is likely to play an increasing role in the mix of alternatives to divorce in the UK too.
Please expand the sections below for further information.
A reconciliation contract is a post-nuptial agreement which allows 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.
It is more than a stark financial document since it sets the scene on the reasons for a rapprochement and sets out relationship commitments newly given. For example: it could include a promise to curb addictive or adulterous behaviour or a pledge by the couple to work less and give more time to each other. In the event these aspirations are not fulfilled, the practical details of the split will already have been agreed and codified.
They really can allow couples to have a fresh start. They can help parties feel more secure personally, emotionally and financially. They can anchor things, change the mood music, change the financial terms of a marriage or take the sting out of a relationship issue.
However, crucially they also protect against the unknowns of the divorce process and help to avoid the acrimony and expense that inevitably arise if divorce does sadly prove the final outcome. The terms of any split would have been agreed at a time when the couple are hopefully being magnanimous and constructive.
It is true that there is a greater track record of couples forging reconciliation contracts in the US and of these contracts being upheld in courts there if challenged.
Whilst pre-nups and post-nups are not enforceable as of right in England and Wales, the landmark Supreme Court decision in Radmacher v Granatino 7 years ago, gave a real boost to the enforceability of pre-nups and post-nups on this side of the pond. There is no reason why, in my view a Reconciliation Contract would also not carry legal weight and could not be relied upon in the courts of England and Wales. That is why people are increasingly interested in the concept of Reconciliation Contracts here and lawyers like myself are keen to develop them as a tool.
There is no fixed point at which a reconciliation contract can come into play. For some couples, it may be such a contract helps to put a marriage back on track before divorce is even properly embarked upon – reconciliation may be the outcome of discussions at home or even formal mediation. For others it may be a way of trying again after a separation, or it may even be a last resort option couples consider in order to press pause on a divorce process, when they decide they want to get off the train and try again to make things work. These things tend to be very relationship specific.
Yes - any tools which help to avoid the enormity and finality of divorce must be a good thing and we believe that bodies like Resolution, politicians and judges will agree as reconciliation contracts grow in popularity.
It is already a legal requirement for divorce lawyers to have ascertained a couple’s willingness to reconcile before going down the formal divorce road. A judge has the power to adjourn divorce proceedings to enable attempts to be made to effect a reconciliation. Many lawyers are also trained mediators and dispute resolution experts to help keep couples away from litigation.
If you require further information about reconciliation contracts or advice from our team of specialist family lawyers, please contact Jane Keir or a member of our team or alternatively call us on +44 (0)20 7814 1200.
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Abby Buckland
Abby Buckland
Jane Keir
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