Protect your assets before you tie the knot
Honor Desmond-Tetlow · February 25th, 2009
Caterer?: check.
Bridesmaids?: check.
Invitations?: check.
Pre-nuptial Agreement......?
No, this is not a trailer for the latest Katherine Heigl movie. Rather, this is how a checklist for a wedding of the future might look. Not a very romantic thought, I know, particularly so soon after St.Valentine’s Day. But there is nothing romantic about a divorce. Too often, as too many can attest, divorces are difficult, protracted, expensive, and unpredictable. And it is that expense and unpredictability that those who support pre-nuptial agreements would seek to remedy.
Traditionally, our judiciary and that of the United Kingdom would not be numbered among those supporters. Indeed our courts have jealously guarded the right to review and at the very least oversee even those separation provisions which are made by married couples. So what is changing?
To trace the change, we need to look back at the year 2000. In that year, the House of Lords, in the United Kingdom, handed down its decision in the case of White-v-White. That judgement and others that followed soon after gave very careful consideration to the bases on which property should be divided when a marriage breaks down. The catchwords to bear in mind are “needs, compensation and sharing”. The compensation criterion, in each case, will depend on the particular facts. In one case, the wife had put her career on hold to stay home with the children. The end result of these decisions is that, increasingly, family property is divided on something closer to a 50/50 basis now. This is a departure from earlier decisions and has a particularly important effect when the spouses are fairly well off.
Of course divorce law remains, as its practitioners like to say, an art rather than a science. No two cases are alike. Many factors need to be considered, most of which are set out in our Matrimonial Causes Act 1974. The length of the marriage, the age and health of the spouses, their earnings and earning capacities, the source of any assets, the number of children and the standard of living of the family are simply some of those considerations.
Nevertheless, it was in response to the tendency of the courts to move toward a more equal division of assets upon divorce that the argument for pre-nuptial agreements began to gather strength. That, and the fact that things are done differently elsewhere.
Anyone who watches e-news or any stories of the ‘rich and famous” will know that prenups are common in some parts of the United States. They are also not unknown in some European countries. And what do these jurisdictions have in common? They tend to uphold the concept of “community of property”. In other words, one finds a 50/50 division of assets in many instances of marriage breakdown. Accordingly, so the argument goes, if we are moving in that direction too, people should be free to “contract out” or decide for themselves, in advance, how they would like to divide their assets if they part.
Two recent decisions in the UK suggest that the courts may be more readily convinced of this argument than was previously thought. Those decisions also suggest that, in appropriate circumstances, a pre-nuptial agreement may be more than just a factor to be considered, but may actually be very influential.
That “appropriate circumstances” caveat is very important. Current case law suggests the following guidelines: there must not have been any duress or pressure to sign the agreement; each party must have the opportunity to get independent legal advice, or provision of some nature should be made for the less well off partner; and thought should be given to providing for any children of the marriage and some time must elapse between the signing of the Agreement and the actual ceremony . . . the eve of the wedding would not be the optimum time to whip out a prenup!
A further suggestion: A very recent Privy Council decision reflected the court’s continuing discomfort with pre-nuptial agreements. Therefore, it would be wise to reaffirm the agreement after marriage. The contract then becomes a form of separation agreement that is far more likely to be enforced.
Only time will tell how influential or important such agreements will become in Bermuda. But for now, we can state that the old adage that, in our jurisdiction, a pre-nuptial agreement is “not worth the paper it is written on” no longer holds. So, go back to that checklist and pencil in a prenup.
Honor Desmond-Tetlow is an associate in Mello Jones & Martin’s litigation group and advises on all areas of matrimonial and family law and in general civil litigation. She is also a trained mediator and certified in collaborative law.
(with permission of Bermuda Sun)