It is normal for those facing divorce to ask themselves or obtain legal advice about how to protect assets on divorce
Prenuptial agreement
A prenuptial agreement (or a ‘’prenup’’) can help you to protect your assets in the event of a divorce. A prenuptial agreement is a written agreement entered into by a couple before they get married which outlines how assets will be divided between them in the event of a divorce.
Having a prenuptial agreement in place can offer a degree of certainty as you have already agreed in advance how to distribute your assets on divorce rather than leaving it to the wide discretion of the courts.
It is important to understand that prenuptial agreements are not legally binding but the Courts are increasingly accepting prenuptial agreements as proof of the divorcing couples’ intentions of how their assets should be divided.
For prenuptial agreements to be enforceable, the following criteria must be met:
- The couple each must have received independent legal advice on the agreement
- They must have received full and frank disclosure about the other partner’s financial situation
- The agreement must be entered into freely and willingly by the couple and the agreement should be negotiated and signed at least three months before the wedding
Family Home
If the family home is legally owned by one spouse, then the other spouse can register their interest in the property when they have separated. This is known as a Matrimonial Home Rights Notice.
The application is free and once a Matrimonial Home Rights Notice is in place, then the family cannot be sold or re-mortgage without the spouse being notified.
If the family home is jointly owned as ‘’joint tenants’’ then each spouse is treated as owning the property in its whole. This means if one spouse dies before the divorce was finalised then the other spouse automatically inherits their share of the property. A spouse may want to change the way property is owned and ‘’severe’’ the joint tenancy. Each spouse will still own the property, but they can choose to leave their one-half share to whoever they wish in a Will.
Pensions
After the family home, pensions are usually the second biggest asset in a divorce and they generally form part of the matrimonial pot for division between spouses. During the negotiating process, pension offsetting can be used to protect a spouse’s pension if alternative capital assets are available. For example, one spouse keeps their pension whilst the other spouse keeps the family home.
This may sound straightforward however pensions are a complex asset and input from a pensions expert is normally required.
Wills
You may also want to consider making a Will. If you were to pass away before your spouse and before ending your marriage without having left a Will, then your estate will go to your spouse.
For advice on how to protect assets on divorce, please contact a member of our Team.
