Pre-nuptial and post-nuptial agreements
Yesterday I held a meeting with one of the law firms we have done a lot of business with over the last few years with regards to trusts, Inheritance tax and Estate planning. However this meeting was with one of their family law divorce lawyers and the main topic under discussion was pre-nuptial and post-nuptial agreements.
Many of our clients have set up trusts over the years to help ensure their children have the means to retain their inherited assets in the event of divorce or bankruptcy. Although this is very sensible planning for most people with estates valued in excess of £650,000 we have not until recently stared to discuss the possibility of a more belt and braces approach.
It seems to me quite difficult to discuss pre-nuptial and post-nuptial agreements with someone you are about to marry or are already married to. All too American for us Brits? However, if such an agreement as a condition of becoming a beneficiary of a trust or will is something your parents or the trustees of a will insist on – that’s an all together different thing – and you should pass the blame to someone else!
For Pre-nuptial agreements – there is currently a case going through the Supreme Court (formerly the court of appeal) for the UK which should set a precedent as to how these cases are handled in the future. In addition there is some statutory law also currently being brought into play (depending on the next goverment) which will also help.
For post-nuptial agreements – these are already fairly well established and are already taken into account by the divorce courts in the rare instance someone has put one into place.
It seems the best scenario is to have both these agreements in place and also trust planning to be as safe as possible.
The overall costs of these types of plans are relativly negligable compared to the potential benefits and should be considered by most well off people for their children or themselves. As financial planners we are now including these arrangements in financial planning discussions with our clients and can arrange meetings with the recommended law firm if required.
I will try and update you all on this as and when the ruling in the Supreme Court takes place.