The Importance of Prenuptial Agreements

On Sunday 8 July 2007 an article appeared in The Sun Herald entitled “More couples opting for prenuptial agreements”. Some parts of the community seem divided as to whether a prenuptial agreement is required. Some trust in love and others trust prudence. A prudent individual whether male or female realises marriage statistics today state approximately 52% of all married couples remain married and 48% of all married couples divorce. In other words the short answer appears to be that almost one in two people who marry will divorce at some time during the course of their life. One of the most unfortunate things about this is that although there are a number of early divorces the vast majority of these occur to people who have been married for a period in excess of 10 years. As a consequence this is at a time when young people’s careers are accelerating and therefore the future is pregnant with opportunity. For older couples who have been married in excess of ten years they have probably accumulated real assets and are subsequently face a substantial risk in the case of a matrimonial breakdown.

Obviously there are a number of young couples who recognise the risk and take preventative action. Through our practices in Sydney there has been a fourfold increase in clients who are seeking the benefits conferred on them by a pre-nuptial agreement. It does not matter whether these individuals are younger or older they have one thing in common they wish to protect themselves against the uncertainty of the future which often comes about due to either an early union or after they have experienced divorce and wish to protect their individual assets. This applies to both men and women who have gone through a divorce irrespective of whether it is amicable or otherwise. For older couples they realise that the further depletion of their assets, although it may not leave them destitute, will certainly compromise their living standards in future.

Sometimes clients baulk at the cost of a prenuptial agreement because they fail to recognise the skill, knowledge and expertise required of a legal practitioner who is drafting it or alternatively of the legal practitioner who is called upon to give a certificate of independent legal advice to the other party who is to co-sign it. There is absolutely no doubt at all that a properly drafted prenuptial agreement which addresses the individual circumstances of a party seeking the benefit of it is a great investment. One of the major reasons for this is that where there the agreement is properly drafted it effectively impedes the jurisdiction of Family Law Court leaving the document to be construed according to contractual principles. Provided this document is clear and unambiguous then there is little that any court can do other than to give force and effect to it. Yes there are circumstances in which a prenuptial agreement can be overturned and therefore they need to be bespoke.

There are very few family law lawyers who do not believe in prenups which are a class of binding financial agreement. Prenups are really only there to deal with the division of property and spousal maintenance although some times couples try and extend them to become lifestyle agreements. Lifestyle clauses are not enforceable. It is important to keep in mind that prenuptial agreements need to be executed before a person marries and if a person fails to marry they have no force or effect at law.

Often clients recognise the need to have a prenup but sometimes leave it almost to the very end before they do anything about it. They think the whole process can be completed within a very short time for example 24/48 hours. This couldn’t be further from the truth and even if it were true, a prudent individual wouldn’t leave it until the last moment as they may not be able to find a lawyer who is available to attend to their matter at the last moment. Anyone contemplating a prenuptial agreement should ensure they instruct their lawyer at least a couple of months prior to the date fixed for their wedding to deal with it so that it is out of the way prior to their nuptials.

It should not be forgotten the prenuptial agreement is one of the most valuable documents ever executed by any person during the course of their lifetime. Although some individuals are likely to baulk at the cost of a properly drafted prenuptial agreement its cost pales into insignificance when compared with the likely costs associated with a property settlement and spousal maintenance at some future time should a marriage fail. As the old saying goes never be penny wise and pound foolish. Should you have a different view it would be appreciated if you would share it with us as balanced commentary is what it is all about

Comments

[C Tong]

I have noticed that the legal profession has failed to address the inequity of the younger partner when providing prenuptial advice. The older partner with dependents will not be able to contribute equally to the relationship. This issue is not addressed by the prenuptial.

I am a younger woman. I bring fewer assets to the relationship than my older partner (he is 10 years older). However, he will be unable to contribute as much as I during the relationship as I earn the same income, my working life will be 11 years longer than his and he has two dependents to pay for.

Everything I have read from legal advisors is from the perspective of protecting the older partner who may have substantial assets. How is the younger woman with fewer assets but no dependents and equal or greater earning capacity protected???

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[Robin Smith]

Though Prenuptial agreements are not compulsory in UK law but they have manipulated
many judgment decisions on divorce proceedings. Many judgments have proved
right to lawyer’s apprehension on prenuptial deals.

http://legallaw.sosblog.com/llblog-b1/Mounting-Pressure-in-UK-for-Changes-in-Prenuptial-Law-b1-p22.htm

[Keddies]

prenuptials are deffiantly something that is important.

[Harpreet]

Under Hindu Marriage Act in India the prenupital contracts have been held to be void and unenforceable. For exact case laws you can write to http://www.jotwani.com, wherein the Supreme Court of India has held that a Hindu marriage is sacrosanct and not a contract. Harpreet Jotwani.