One of the purposes of a Pre-Nuptial Agreement is that, in the event of a marital breakdown, there can be clarity as to how the assets will be divided. This is often of particular importance where there is pre-existing wealth, assets, or savings. We are often consulted, for example, by a future spouse where there is inherited wealth or a family business, for example a Farming business.
Farms are unique. They are usually passed down through generations, and often provide income for many members of the same family. However, when a Court are considering the assets of parties on divorce, the farm will be included in the list of assets, and this can be difficult to accept for families who have had the farming business for years. The Courts have a wide discretion when it comes to distributing assets, and the needs of any children of the marriage and the other spouse are of high importance. The starting point is equality, and this may affect the farm as a business and the level of income being generated by it.
A Pre-Nuptial Agreement cannot simply ringfence all assets to the detriment of the other party, particularly if their needs would not be met with this arrangement. However, providing the Agreement has been prepared correctly, at least 28 days prior to the marriage (although ideally significantly longer), the parties have entered into the Agreement voluntarily, there has been an element of financial disclosure, and both parties have received legal advice, it should be expected by the parties that the terms of the Agreement will be binding. Other important factors to bear in mind, are that the agreement is regularly reviewed (every 3-5 years) or where a significant event happens, that could otherwise mean the pre-nuptial agreement may be at risk of being implemented. Whilst a nuptial agreement does not bind the court, it will be highly persuasive if the various pre-requisites are met.
With farms, a Pre-Nuptial Agreement could ringfence the business asset and set up what the intention regarding the business is, if the parties were to separate. If the spouse and any children are sufficiently provided for, this would offer protection for the farm as a business.
Therefore, a Pre-Nuptial Agreement is a very sensible consideration to avoid potential difficulties upon divorce at a later date. Whilst it may seem unromantic, most people marrying into a farming family understand the importance of the farm to the family and the need to protect the business and are likely to agree to an Agreement being put into place.
It is also worth noting that even if the parties are already married, a Post-Nuptial Agreement can be put in place providing this is entered into voluntarily and is considered fair in the circumstances, this can also offer protection upon divorce.
In summary, a Nuptial Agreement, whether before or after marriage, can be a very important tool in protecting a farming business and providing more certainty if the parties divorce in the future. For anyone involved in a farming business and considering marriage, or indeed already married, this should always be something that further advice is obtained around to consider whether a nuptial agreement is appropriate.