How prenuptial agreements can help shape farming family futures
© Cunaplus/Adobe Stock It is important to understand the basic rules to arrive at a secure prenuptial agreement, says lawyer Natasha Grande, a partner at Wilsons Solicitors.
“Not all prenups are created equally – there are some red flags that could render an agreement ineffective,” she warns.
See also: Make a prenup part of farm partnership agreement
These are:
- Where an agreement makes no provision at all for one party
- Where the agreement seeks to prevent someone from applying to the court for financial provision on divorce
- Where the agreement is signed fewer than 28 days before the wedding
- Where there has been pressure to sign an agreement or there has been a mistake, undue influence, misrepresentation or unconscionable conduct
- Where there has not been full disclosure of assets and interests on both sides.
The couple need to fully understand and appreciate the implications of the agreement and have had all the information that could affect their decision to enter into it, says Natasha.
“Prenups offer more certainty of knowing what you will get on divorce. The alternative of litigation is not certain.
“All bets are off if you are relying on the courts, and that goes for both parties to a marriage.
Farming family circumstances
“It can be challenging coming into a farming family where there is the unique asset of the farm and business, especially if you are not from a farming background and won’t necessarily become part of the farming partnership or work in the business.”
A good prenuptial agreement in a farming situation might seek to outline not only the financial arrangements but also expectations about the future, such as how generational change might take place, suggests Natasha.
This could cover long-term plans for accommodation changes – for example, generations moving between houses on the farm. Including this in the prenup can make things clear from the outset.
The need will also arise in some families to provide financially and/or provide care for older generations as things change.
Where this is the expectation, then setting this out at such an early stage can help avoid misunderstandings and stress, says Natasha.
An agreement can include financial provision for children.
Significant changes in circumstances during the marriage, including the birth of future children, are usually dealt with by a review of the terms of the agreement.
A review clause inserted into the prenup or postnup sets out when a review should take place.
How childcare is shared could be covered in a separate parenting agreement.
Prenuptial agreements cannot be altered after marriage but can be replaced with a postnuptial agreement.
Other than the 28-day rule, the same requirements as for prenups are needed to make these secure and likely to be held up by the courts.
What is a prenuptial agreement?
A prenuptial agreement is entered before marriage and sets out how assets would be divided and financial support provided if the marriage breaks down through either divorce or separation.
It defines what matrimonial property is (assets built up during the marriage) and what non-matrimonial property is (assets owned before the marriage, including through inheritance and gifts).
It can also outline how the couple want their finances to operate during the marriage.
In Scotland, the terms of separation agreements are enforceable. In England and Wales, prenuptial and postnuptial agreements are increasingly being taken as a demonstration of intent but are not enforceable.
The family court should give effect to the agreement provided certain conditions are fulfilled.
These are that it is freely entered into by both parties and that basics are in place, including no duress, full disclosure of assets and that independent legal advice has been sought on both sides, says Natasha.
“That is, unless in all the circumstances it would be unfair to hold the parties to the agreement or it could prejudice the reasonable requirements of a child of the family. Fairness is the leading principle in family law.”