If you are planning to marry for a second or third time, it’s sensible to sign a prenuptial agreement.
Specialist prenuptial agreement solicitor Angelique Holm recommends every engaged couple consider a prenuptial agreement, but there are often stronger reasons to do so before a second or subsequent marriage.
For prenuptial agreement legal advice, telephone 0203 488 8620 or email info@hopeholm.co.uk.
Why you should consider a prenuptial agreement
Someone in your family may have already quoted divorce statistics or raised an eyebrow at your decision to get married for a second or third time. Comments and eyebrow-raising can make you reluctant to consider a prenuptial agreement, because they may make you appear to agree with the doubters. However, prenuptial agreement lawyers say anyone contemplating a second marriage should sign a prenuptial agreement because:
- It’s important to have a prenuptial agreement if either you or your partner has children from previous relationships.
- If you are getting married for a second time, you are likely to have savings, a pension or be a homeowner.
- If you are a bit older when you remarry, the prospect of your receiving an inheritance from elderly parents or extended family may be more likely than when you married for the first time.
If these solid financial reasons don’t make you think that a prenuptial agreement is worth checking out with a family law solicitor, then think back to the first marriage divorce proceedings and financial negotiations or court proceedings that led to your obtaining a financial court order. Family law solicitors do get tired of hearing the phrase that it is only the lawyers who win in a divorce settlement, as whether you win or lose, they get paid. However, it’s true that an acrimonious marriage split comes at an emotional and financial cost. A prenuptial agreement reduces the risk of you ending up in court arguing over who gets what if you separate.
Second marriages for tax reasons
Many couples are happy living together without marriage or a civil partnership and see no reason to change the status of their relationship other than for tax purposes. Many financial advisors and accountants recommend second and third marriages as part of a tax mitigation strategy. That may sound like a risky strategy if you have been through a difficult divorce, but the risks can be minimised with a carefully drawn-up prenuptial agreement that contains safeguards to protect both partners.
If you are in an unmarried relationship, your estate may pay a substantial amount of inheritance tax when you pass away because there is no IHT exemption for cohabitants. If you marry, upon the death of the first spouse, the surviving spouse can inherit the entire estate without paying inheritance tax because of the spouse’s IHT exemption.
Angelique Holm works with private client solicitors, financial advisors and accountants, so you get joined-up private client and tax legal advice and specialist family and prenuptial agreement legal advice. This enables you to make an informed decision on whether a second marriage with a prenuptial agreement best suits your needs.
Second marriages with children from prior relationships
Blended families can be very complicated, whether your children are still living at home, financially dependent on you, or living their own lives but feel the need to ‘protect’ you.
Children often feel they have a vested interest in your second marriage because if you remain in a cohabiting relationship, your unmarried partner may be entitled to nothing if you split up because of the way property and trust law works. If you marry your unmarried partner, your new spouse may be entitled to half your assets if you separate, especially if you cohabited for a few years before entering a second marriage. Equally, if you marry your partner and don’t make a Will, your new spouse may inherit all or most of your estate under intestacy rules.
Adult children may be reluctant to explain the financial factors behind the reasons why they are seemingly unwilling to support your remarriage plans. However, remarriage with the spouse’s inheritance tax exemption, a Will made in contemplation of your second marriage or a Will made after your marriage, and a prenuptial agreement may help your adult children realise that you are both a romantic and financially savvy couple, wise enough to ensure that your partners and their best interests are protected.
Prenuptial agreements for second marriages
There is an art to drawing up a prenuptial agreement for a second marriage. It isn’t sensible to ask ChatGPT or Co-Pilot to write one for you, because the agreement needs to consider your personal and financial circumstances and cater to both your needs. If it doesn’t, it won’t be effective.
Some engaged couples or their adult children think a prenuptial agreement is about preventing the new spouse from claiming any money from their spouse if they subsequently divorce. If an agreement tries to do that, it may not be effective.
The most important thing about a prenuptial agreement is that its terms must be fair and meet both spouses’ reasonable needs. If you have been in an unmarried relationship for 20 years and your prenuptial agreement says your husband or wife won’t be able to make any financial claims if you divorce, the agreement probably won’t be upheld by the court in any subsequent divorce proceedings. The court may take a different view if you married within six months of meeting your partner and separated six months later.
Some adult children and their parents question what the point of a prenuptial agreement is if your family lawyer cannot guarantee that the court will make a financial court order in the same terms as the negotiated prenuptial agreement. The point of a carefully drawn prenuptial agreement is to limit financial claims and reduce the risk of a lengthy, expensive court battle.
The best way to explain how a prenuptial agreement works is to use an example:
- Mike and Karen have been living together for ten years.
- The house, business and savings are all in Mike’s name.
- Mike is worth around £5 million. Karen has some lovely jewellery, some savings and her car.
- If Mike and Karen split up, Karen won’t have a claim over the house or the business as she can’t show that she has a beneficial interest in Mike’s house or other property under property or trust law. She won’t be able to claim spousal maintenance as she is not a wife.
- If Mike dies, then whether he has made a Will or dies intestate without a Will, Karen can make a claim against his estate. However, a substantial proportion of the estate will be liable to inheritance tax as there is no IHT spouse exemption.
- If Mike and Karen get married without a prenuptial agreement and later separate, Karen could argue that there is no reason to depart from the family law principle of equality and ask for a financial settlement of £2.5 million.
- If Mike and Karen marry after signing a prenuptial agreement drawn up by a family law solicitor, the court may uphold the terms of the prenuptial agreement if all the prenuptial agreement safeguards were put in place, the terms are fair to Karen and meet her reasonable needs. An example of fair prenuptial terms is that Karen will receive 25% of Mike’s assets if they separate and divorce, provided that percentage is sufficient to meet Karen’s reasonable needs for a house and a retirement fund. The prenuptial agreement, therefore, is financially prudent, as without it, there is a strong likelihood that Karen could have received 40-50% of the assets.
The skill in drawing up a prenuptial agreement is in understanding the extent of the family and non-matrimonial wealth, making sufficiently detailed enquiries into reasonable needs and balancing everyone’s expectations so that a fair, if not generous, agreement is reached that both husband and wife can live with if there is a later separation or divorce.
Contact HopeHolm Family Law for legal advice on prenuptial agreements.
Please telephone us at 0203 488 8620, email us at info@hopeholm.co.uk, or visit HopeHolm Family Law.