Do you need a pre-nuptial agreement to protect your business?

If you run your own business and you are planning to get married, it may be worth thinking about drawing up a pre-nuptial agreement to protect your business in the unhappy event of a divorce.

It may sound unromantic, but if you want to be sure that both parties are fully protected then it’s important to consider the financial arrangements at the outset.

In my 40 years experience as Senior Partner and Head of Family Law at Fisher Meredith LLP, I’ve helped many couples through the legal issues surrounding assets when getting married (and unfortunately when getting divorced too).

In my opinion a pre-nuptial agreement is particularly important if there are big differences between you in terms of wealth or age, or if it is a second marriage for one of you and you already have children, or there is a particular asset (like a business) that you want protected.

If you run a business then it may make sense to ‘ring fence’ the business so that no claim can be made on the value of the business and/or that its income should not be shared.

However, there can be problems with this. Suppose that the business did not thrive, could the wife still claim support from the husband in the event of a break-up? These are all issues that need to be considered.

Here are some tips to help you through the pre-nup process…

  1.  The first essential step to getting an agreement is for you each to take independent legal advice.
  2. The second step is for you each to tell the other frankly about what you own and earn and expect to receive. This is the point at which you need to discuss your business assets and how you see them within the marriage. This is best done by completing a standard form called a Form E obtainable by download from http:\\hmctsformfinder.justice.gov.uk.
  3.  The complexity of your assets will dictate how much detail needs to be given. Your solicitors will use this information to create a schedule for each of you respectively so that the ‘pre-marital assets’ can be ascertained, and thus readily ringfenced and distinguished from property jointly owned at the time of marriage or acquired subsequently.
  4.  If there is disparity of wealth you may want to make provision for sharing more equitably as the marriage endures, or you may want to state that there will be no sharing of assets, as is possible in some continental jurisdictions.
  5.  All these aspects need to be discussed and thought through, together with your partner and then with your solicitor. You will also want to ensure that you make a will to reflect what you are stating will happen in the event not only of divorce but of death.
  6.  Pre-nuptial agreements are becoming more common these days as they can now be enforced by the courts in the unhappy event of a separation or divorce — but they should be drawn up and signed six months before the wedding if possible. This is to avoid what is known as a claim of “late pressure” on (usually) a bride excitedly preparing for her big day or on the fiancé facing the prospect of withdrawing wedding invitations.
  7.  If you do leave it too late for a measured discussion pre marriage, you can of course also encapsulate what you meant to arrange in a post –nuptial agreement, again with the same prescription of full disclosure but now without the same leverage.

A pre-nuptial agreement may seem unromantic, but talking about it together and putting a clear agreement in place can save a lot of heartache later and can be considered the basis for a strong relationship built on transparency and communication.

Pre-nuptials are now so common, and so important, that solicitors often go to Wedding Fairs to set up their stalls alongside those offering the flowers, the cake and the dress.

 

About the Author:

Eileen Pembridge is a Senior Partner and Head of the Family Dept. at Fisher Meredith LLP. Eileen has over 40 years of experience in Family Law matters and guides clients through all the legal issues that need to be sorted when a relationship is breaking down.

 

Eileen was a former chair of the Law Society’s Family Law committee and has contributed to law reform. She set up Fisher Meredith nearly 37 years ago and now heads a large team of dedicated lawyers with a wide range of skills.

 

Fisher Meredith offers a wide range of consumer legal services which include; Children Law, Conveyancing, Court of Protection and Community Care Law, Criminal & Fraud, Dispute Resolution, Education, Employment, Family Law, Human Rights, Immigration, Wills & Probate.

 

For more information: www.fishermeredith.co.uk  / 020 7091 2700

1 Comment on Do you need a pre-nuptial agreement to protect your business?

  1. Useful advice, Ellen. We have seen clients (we are on the financial advice side, working to support people through the separation and sort themselevs out finanically for the process and the after-effects)and I am often surprised by the number of people who still think that “their” business won’t come into the divorce discussions becasue it is “theirs”. And if I had a pound for every person I have heard say “Oh it will be fine. He/She would never get nasty/difficult over money” well, I would probably be on a beach somewhere. Unromantic? There’s nothing more unromantic than a painful divorce, so I can’t see what harm it does to sort out a few things just in case tehy’re needed….

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