Prenuptial Agreement and Trust
27/04/2021
359
3 min read
42% of marriages end in divorce, but we keep taking the risk. Why? - Because we're led by social convention? Because it's tax efficient? or because we're optimistic romantics? Whatever the reason, if you're getting remarried, take heed of this article and seriously consider a prenuptial agreement, especially if you have children.
There is no fixed proportion of your assets which goes to your spouse after death or divorce (unless you die without a will). If you and your partner disagree, the fairest outcome must be argued by law.
Placing your assets in Trust can be an effective way to protect your estate for your children from your first marriage after your death. However, it can be problematic if this marriage ends in divorce, for the following reasons:
- This type of trust is called an 'irrevocable trust'. This means you can't ever get any of your assets back out of the trust.
- Once your estate is an asset of a trust, you no longer own it
- The trustees cannot share any trust capital or income with you
- Once your home is an asset of the trust you would have to pay the trustees rent on the property if you wish to continue to live in it
- You cannot use any trust asset to contribute toward the purchase of a new home
- If your marriage ends in divorce, the trust would be treated as part of the joint property of the marriage, meaning that a family court judge could divide the assets, add or remove beneficiaries
- Setting up the trust could bring forward tax charges that would reduce the value of your wealth in your lifetime
- If they remarry, will the beneficiaries of your trust want them living in the property together?
Alternatively, if you die before your spouse
What is the purpose of a prenup agreement?
A prenuptial agreement may be the best way to protect your assets because you and your partner list all of your pre-marriage assets and agree what each of your property rights will be after the marriage.
Do prenups work in UK?
A prenuptial agreement can be disputed if it is not done properly, so it is not technically legally binding in the UK. However, if you meet the following requirements, there should be little or nothing for a family court judge to dispute.
- You must receive independent legal advice from separate solicitors
- It must be fair
- You must both give full financial disclosure
- You must allow enough time to consider and negotiate terms
- Sign the document at least 28 days before the marriage
- The terms should allow for both parties to have somewhere to live and money to live on
To better secure the terms of your prenuptial agreement, you can have sign a post-nup agreementpost-nup agreement after the marriage. It is also worth noting that marriage overrides your will. Speak to a solicitor for legal advice.
Need help protecting your premarital assets in your new marriage?
Consider a prenuptial agreement to set out your rights with your new spouse. This can save you from financial loss and bitter disputes down the line.
Sam Conveyancing can set you up with pre nuptial agreement solicitors to assist with:
- Independent legal advice
- Negotiations
- Drafting your documents
We have on hand counsel to offer guidance along the way.
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