How to protect your assets before marriage

Getting married is an exciting time, but also a crucial moment to consider safeguarding your assets, particularly any housing investments.

It may not be the most romantic consideration when planning a wedding, but many couples want some assurance as to what will happen to their assets should they divorce or separate.

Parties entering a marriage may have inherited assets or accrued them over time before getting married – especially as more people are now getting married later in life. Let's take a look at how to protect your assets before marriage.

How can I protect my house before marriage?

Your home is more than just a place to live; it’s a significant financial asset. Protecting your housing assets before marriage is vital for several reasons:

• Asset conservation: Safeguarding your housing assets ensures they remain intact in the event of a divorce or separation.
• Financial security: Your property assets provide financial security to both you and your partner, especially if either of you face financial problems in the future.
• Peace of mind: Knowing your housing investments are protected can ease stress and doubt, allowing you to focus on building a solid foundation for your relationship.

Strategies:

• Prenuptial agreement - agree how your assets will be divided in the event of divorce
• Property Ownership Structure – explore other ownership structures for your property, such as a joint tenancy or tenancy in common.
• Trust options - Including a Deed of Trust, or setting up a lifetime or will trust.
• Keep finances separate – keep your pre-marital cash and savings in your own accounts and properties in your own names. You could open a joint account just for combined expenses like rent and bills.
• Regular reviews – adjust your asset protection strategies regularly so they support your current relationship and financial situations.

What happens to property owned before marriage in the UK?

It varies with each personal case, but if a house owned by one person before the marriage is then lived in and used as the marital home, it will generally be considered a matrimonial asset. However, in the event of divorce, it might not always be divided equally.

Is it worth getting a prenuptial agreement?

A prenuptial agreement is a contract that you and your partner make before getting married that sets out who owns what belongings, assets, property, and money, as well as how they would be divided out should the relationship end in divorce or separation.

Not only does a prenup protect assets, but it can also shield one party from the other’s debts. This could be valuable if one party has or expects to have, substantial debts that they don’t want their partner to be responsible for, if the marriage ends.

Who benefits the most with a prenup?

Prenups are not just for the rich and famous; they can be quite useful for those who already own a property or have some savings before they get married.

What percentage of couples get a prenup?

Prenuptial agreements are only used in about 10% of marriages, even though these agreements can be incredibly helpful. Just over 10% of people believe there’s a chance their marriage might end, despite high divorce rates.

What are matrimonial and non-matrimonial assets?

Matrimonial assets include any monetary assets acquired during the marriage. Under UK law, both parties are entitled to a share of these assets regardless of who provided the resources.

It can often be difficult to confirm which assets were accrued before, during, or after the marriage in the event of divorce proceedings or separation.

These assets can include:

• Property
• Pension plans
• Investments
• Savings
• Cars
• Furniture
• Other shared possessions

In some cases, assets obtained before marriage can be counted as matrimonial assets and therefore part of marital funds, including a property purchased as the family/matrimonial home. A business can also count as a marital asset.

Non-matrimonial assets are financial assets acquired before a marriage. Unlike matrimonial assets, these can be requested to be omitted from the Financial Settlement.

These generally include:

• Inheritance
• Family businesses
• Property purchased before marriage

In a long marriage, where either party has brought pre-marital assets into it, these will steadily shift into the realm of shared matrimonial property.

The longer the marriage, the more likely it is that pre-marital assets will be included in the matrimonial pot and therefore split evenly as part of the financial settlement.

Asset safeguarding strategies

The best strategy is to always be prepared. If you have any assets that you’d want to protect in the event of a divorce, it’s easier to take precautions before getting married. You can do this by using pre-nuptial/post-nuptial agreements, loans, and trusts.

However, if you haven't taken any precautions before marriage, there are still steps you can take to protect your assets from divorce. Seek proper family law advice, stay in your family/marital home as long as it is safe to do so, and avoid moving in with a new partner.

Prenuptial agreements:

There is no better option for protecting assets before marriage than a prenuptial agreement.

Prenups are often deemed unromantic and thought of with negative connotations around one party getting an unfair deal. Making these arrangements whilst a relationship is in a good place often helps couples make more rational decisions about how their assets should be shared should the worst happen. Many couples actually prefer to begin their marriage from a place of complete transparency and this relieves their practical anxieties around getting married.

Prenups are not legally binding contracts, but they are dependable for protecting assets if they follow these strict guidelines:

• The contract must be signed well in advance of your wedding to show it was not signed under pressure.
• Full financial disclosure from both parties will need to be included.
• Both parties must take independent legal advice before signing the agreement.

Can a prenup be contested during a divorce?

Challenging a prenuptial contract during a divorce is possible, but a fair argument must be provided. These include:

• If any children of the marriage would be mistreated.
• If the agreement was signed when one party lacked mental capacity.
• If either party was put under pressure or undue influence at the time of signing.
• If the agreement was drawn up less than 21 days before marriage.
• If both or either party had not fully declared assets or debts.
• If any changes were made to the text after the agreement was signed (it is possible to legally amend a prenup if either party's financial circumstances change, though)

Can a prenup be declared null by a judge?

Even without a challenge, judges can proclaim a prenup invalid. These reasons include (but are not restricted to):

• The judge being able to prove one party was forced into signing the agreement, or if they lacked mental capacity when it was signed.
• If evidence proves to the judge that one or both parties did not understand what they were signing.
• The agreement has conditions that could be seen as an effort to control or demean either party
• Either or both parties failed to disclose assets and debts fully
• The paperwork was either poorly prepared or filed incorrectly

In family courts, prenups are playing their part in safeguarding finances, assets, and family wealth in divorces. That is, if the contract checks the criteria listed above.

However, there are cases in which a prenup would be null and void in the eyes of the court. Seek specialist legal advice before signing an agreement (pre or post-nuptial).

Loans:

When giving a significant sum of money to a couple, a parent or other family member might have concerns over what happens to it in the event of a divorce.

Loans are handy here, as financial gifts have little security when couples divorce. The money provided as a loan from a family member is easier to protect. If the couple divorces, the loan will be viewed as needing to be repaid, preventing the money from going to the wrong person.

A full loan agreement detailing the total amount being lent, the reason for lending it, and the terms and conditions for repayment is necessary.

Trusts:

Like with loans, trusts are often used to protect family wealth. A family member can place assets within a trust to ensure they remain with the intended person or people.

Trusts can be useful but also prone to attack for numerous reasons. If you’re looking to protect family wealth using a trust, it’s important to get proper legal advice to ensure it’s set up correctly.