A number of recent high-profile celebrity separations have brought the issue of marriage contracts (often referred to as ‘pre-nups’) into popular discussion. While they may be common where the parties are very high net worth, there are a number of reasons why a marriage contract may be useful even where the parties don’t have celebrity-sized bank accounts.
If one party comes into a marriage with a home and both parties live in that home after marriage, it becomes a matrimonial home. To put it simply, this means that the value of the home is to be split between the parties should they separate. Unlike other assets, the party bringing the home into the marriage is not able to deduct its value on the date of marriage from the total of assets to be split on separation. A marriage contract may allow a couple to agree that the value of a home brought in by one party is credited to that party on separation.
Another common issue in marriage contracts is spousal support. The law sets out when a party may be ordered to pay support to his or her former spouse. Depending on the circumstances of the relationship, its duration and the income of the parties, spousal support awards may be for large monthly sums over long periods, including indefinitely. A marriage contract may allow a couple to agree that neither will have to pay spousal support on the breakdown of the marriage.
Parties may also want to protect certain assets or the increase in value of certain assets during the marriage. A marriage contract can be a means of doing this.
Marriage contracts can certainly help parties avoid costly and time-consuming litigation should they separate. However, in order to be upheld, they must be negotiated and signed under specific conditions, usually after the parties have each received independent legal advice and been provided with sufficient information about the other’s financial situation.
A family lawyer can assist you in negotiating and drafting a marriage contract which best represents your wishes and protects your interests.