Entering a marriage or civil partnership imposes significant legal consequences upon individuals. The law defines matrimonial property and directs how this should be divided upon separation. To avoid the potential implications of this, intended spouses or civil partners can enter into a pre-marriage/pre-partnership agreement. A carefully constructed pre-marriage contract can:
- Protect pre-marital assets
While assets accrued before marriage are generally excluded from matrimonial property, if changes are made to the nature of the asset during the marriage, it may be converted into matrimonial property. To avoid this, a pre-marriage contract can state which assets will never be considered matrimonial property regardless of changes. This allows the asset owner to dispose of or invest it as they wish.
- Protect wealth inherited or gifted during the marriage
Assets gifted by third parties or inherited during the marriage are excluded from matrimonial property. However, if the gifted or inherited assets are changed in nature during the marriage, then they could be converted into matrimonial property. A pre-marriage contract can expressly state that this will not happen.
- Protect business interests
The contract can specify how business interests will be dealt with on separation, for example how share ownership or profits are treated.
- Protect against debts
If one person enters the marriage or civil partnership with significant debts, a pre-marriage contract can ensure the other partner is not held responsible for those debts if they separate.
- Protect future income
A pre-marriage contract can specify how future income is to be treated upon separation, including bonuses, interest and rental income.
- Provide certainty
Individuals can relax, knowing their assets are protected, with some certainty about their financial position after separation. Reaching agreement while both partners are still on good terms could prevent lengthy disputes or costly litigation later. Remember that to be robust to challenge, any agreement must be fair and reasonable, drafted with legal advice and without pressure to sign.
