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Just got engaged on Valentine’s Day? Along with the ring and the champagne there may be one other not so romantic thing you need to think about. Gone are the days when pre-nuptial agreements (or pre-nups) were just the domain of the rich and famous – more and more millennials are seeing the benefit of setting out their finances up front and avoiding messy problems in future. In particular, if you own your own business a divorce can lead to the ownership of the business being transferred to your spouse and potentially the involvement of an ex-spouse in the business post divorce, something which is unlikely to be in anyone’s interest. So, what are the key things to think about before walking down the aisle?
A pre-nup is a written contract entered into by a couple prior to marriage which sets out what the division of assets will be if the couple gets divorced.
While there is no act of parliament in this jurisdiction making pre-nups binding, since 2010 courts have given increasing weight to pre-nups. If the pre-nup is properly drafted, and is considered fair by the court, there is every chance it will be enforced by the court.
To give your pre-nup the best chance of being enforced there are some things you should think about:
As people marry later and second marriages are more common, one party might bring considerable assets into the business and a pre-nup can help that party protect those assets, or a business built up over many years.
It’s not just second marriages, future inheritance can also be an asset that individuals want to protect.
If you have taken the time to value the assets correctly, and followed the recommended steps, then your pre-nup can be drafted in such a way as to ensure that if the worst comes to the worst and the marriage were to end in divorce, the Courts would enforce the pre-nup. Divorce is a stressful time and having certainty as to the outcome takes some of that stress away and hopefully helps people separate with as little conflict as possible.
Corporate Finance Partner
Allard Bailey Family Law