Pre-Nuptial Agreements: To do or not to do.

Pre-Nup or Not Pre-Nup

That Tricky Question

Jared Stern at Upliftlegalfunding.com comments on key points to consider for people looking to safeguard their financial future.

Most couples entering a marriage are reluctant to talk about a Pre-Nuptial Agreement

In years gone by, the prenup was aimed at allowing men to keep their money and assets away from their wives in the event of a breakup. Nowadays, however, it’s just as likely that women will enter into marriage with more assets than their partners.

It is important to state here that prenuptial agreements have no basis in law in Ireland, so in the event of separation or divorce, the judge is not bound by its terms. However, there is nothing in Irish law that stops a couple intending to marry from signing a prenuptial agreement, and these agreements can serve as guides for the courts in judicial separation and divorce cases. If a prenuptial agreement makes ‘proper provision’ for each party, it is more likely to persuade the judge, and only a prenuptial agreement entered into after independent legal advice for both parties is likely to be taken into account.

Most couples entering a marriage are reluctant to talk about a pre-nup as it is seen as a lack of faith in each other or a belief that the marriage will eventually fail. In the flush of young love, this is understandable and the heart generally overrules the head, but the reality is that some marriages do fail.

In 2021, the Court Service’s annual report showed that there were 5,266 applications for divorce.

Given that there are around 20,000 marriages in Ireland each year, that’s quite a percentage of failed marriages. While many of these people will separate amicably, some marriages end in acrimony and bitterness, with some people felling like scores need to be settled and revenge taken. This is where a pre-nup may help get a fair and equitable separation, and will, at the very least, set out a starting point for dividing the assets accumulated during the marriage while keeping assets brought into the marriage separate.

Prenuptial agreements protect both parties and make the financial aspects of divorce simpler.

In the event that the marriage ends, this contract will clearly state which assets belong to which party.

Housing, money, retirement funds and so on are typically merged in a marriage. After some time, it becomes increasingly difficult to determine which assets belong to each party from before the marriage and in the event of a divorce, all marital assets are divided equally.

Through a prenuptial agreement, all these issues are spelled out in advance - such as child support, pensions, and inheritances. Disclosure of all financial assets is essential to enforce a prenup.

If a formal pre-nup seems a step too far, you can still take steps to separate pre-marriage assets so what each party takes into the marriage will be ring-fenced.

Separate your accounts:

Open new bank accounts under your married name and arrange for future payments to be deposited into these accounts with the date of your marriage as the start date. Any transactions made from previous bank accounts after the marriage fall under matrimonial shared assets. The division of possessions will not include any premarital money, including inheritances, gifts, stock portfolios, etc.

To avoid charges of commingling (when the possessions from one spouse are combined with their partner), any funds added to your bank account must be documented.

To ensure that your estate is kept separate, you can also claim taxes under ‘Married Filing Separately’ for tax purposes, which can help in case of divorce in the future.

Separate your property:

As with banking, you can also keep your property portfolio separate. Before getting married, you should appraise any property you own. The value of a property can appreciate during marriage and, therefore, be included in the matrimonial estate.

Retirement funds:

With retirement funds, keeping statements dated before the marriage may entitle you to that amount in the event of a divorce.

Business evaluations:

Entrepreneurs and people who run their own businesses are advised to get an appraisal of the value of their business. This way, you can claim for that amount and only the remaining value would be split between you and your spouse.

While no one likes to think their marriage is going to fail, it does make sense to make some provision for the event, however unlikely it may seem.