The family courts in the United Kingdom have a significant amount of discretion as to how these assets are divided.
The starting point for a division of assets on divorce is 50:50. This not only applies to property, savings and investments but also to pension investments.
The court can award a departure from equality in favour of one party if that party can demonstrate that they “need” a larger portion of the assets.
For example, if the breadwinner has a larger mortgage capacity it might be argued that they therefore need a smaller share of the capital to rehouse to the same standard.
The situation for those “breadwinner” clients is even more stark if they brought the bulk of the assets into the marriage for example, by way of inheritance, gifts from family or (as is common with marriages in later life) assets that were generated by them before the parties married.
To marry or not to marry?
Much will depend upon your priorities. Is it an inheritance tax saving that you are looking for regarding your surviving spouse, civil partner and your respective children? Or have you considered that you might have to hand over more than half of your wealth if the marriage sadly fails? While there are dilemmas, the solution could be simple: nuptial agreements.
Historically, many couples have shied away from these types of agreements. Even discussing them seemed unromantic and taboo, and a sure sign the marriage was perhaps doomed to failure.
However, times are changing. Over the past three years we have seen a significant increase in clients looking not just to make sensible tax-saving decisions, but also to ensure those decisions do not prejudice them in later life, should the parties need to go their separate ways.
Between 2021 and 2023 we have seen our firm alone witness exponential growth in demand for nuptial agreements, with an increase of activity of more than 750 per cent. This is only likely to further increase as time passes and clients become more comfortable in having these types of discussions.
We believe the public appetite has increased partly due to people marrying later and so, for many, they have already accrued wealth by the time they settle down.
The law is also beginning to catch up with the more modern ways of life and the diversity we see in modern family arrangements.
While nuptial agreements are not (yet) legally binding, in 2010 the Supreme Court decided these agreements should be given effect if freely entered into with full appreciation of its implications if it remains fair to hold the parties to their agreement.
This principle has been reinforced over the years, most recently last year in the case of MN v AN [2023] EWHC 613 (Fam) where a wife unsuccessfully challenged her nuptial agreement and the terms where upheld.
