A Quick Guide to Prenups

What is a prenup?

A prenup is a document which a couple sign, before they get married, to set out what the financial settlement would look like if they got divorced and to "ring-fence" any assets that one or both of them is bringing to the marriage, or that they may inherit during the marriage.

Ideally it is quite a flexible document; a prenup may deal with what would be the impact on the financial settlement of children being born to the couple and one of them giving up work, of one of them falling ill and not being able to work, or of a short, medium or long marriage. 

Even if you don't have a huge amount of money, should you still get one?

The benefit of having a prenup is that it gives certainty and minimises the risk of an expensive fight if Divorce happens. Couples have autonomy to decide how they wish to split their assets, rather than leaving everything to chance. 

For instance, a rental property may be owned by one person, often looked upon as their “pension” for later life. There may be limited equity in that property, but it provides a good source of income. If Divorce occurs, that property may well be sold and any equity split equally. What then for retirement? Savings and other investments received perhaps through an inheritance, may end up having a similar fate.     

What should you do if your partner asks you to sign one?

Talk through the reasons why your partner feels it is appropriate.  Take proper advice from a specialist family lawyer so that your “head rules your heart” and you know your rights. Don't be afraid to ask for a fair deal, taking into account your needs both now and in the future. Understandably this can seem like a daunting task - most people are busy putting the finishing touches to their special day and don't want to be spending time discussing a prenup!

Very often, marriages that don’t stand the test of time, involve an element of financial mistrust and disagreement. A lack of financial transparency between a couple, or misconceptions over how assets might be treated can lead to resentment and unhappiness. Talking through financial aspects before you tie the knot, is a good opportunity to go into your marriage with open eyes about what the financial picture is and what it would look like in the event you might get divorced. If your partner is driving the request for a prenup, then your lawyer will be there to advise and protect you.

How do you get a prenup?

A prenup in England & Wales (note there are different requirements in Scotland) is a sophisticated document and specialist advice is needed to make sure it is tailored to your family requirements. 

It is very important that:

- it is signed at least 28 days (and usually no more than 12 months) before the wedding;

- there is full and frank disclosure on both sides of the finances;

- you both have independent legal advice;

- its terms are fair; hence time must be taken to think about what would be the impact of future life events and the length of the marriage. 

They can take a few weeks to negotiate, depending on complexity and the negotiating positions taken, so if you are the one pressing for a prenup you are sensible to start the process at least 4-5 months before your wedding date. 

How much do they cost?

Costs will vary significantly, though a properly drawn up prenup is likely to cost from about a thousand pounds. A more complex prenup, involving substantial assets, perhaps trust funds & settlements, tax issues and foreign properties may cost more.  

This may sound like a lot of money, indeed it is.  However, how does the cost compare to the amount being spent on your wedding? Also, how does this compare to the cost of working out a divorce financial settlement if it all goes wrong? The price of protection is often only a fraction of these costs. If a couple end up divorcing without a prenup and needed to go to Court to sort out their financial settlement, then the costs of doing so may be tens of thousands of pounds. A prenup is an insurance policy against that sort of eventuality, because you are very significantly narrowing the scope for future claims. 

Can you sign a prenup after you are married?

Yes; this is called a "postnup". Sometimes couples have a postnup because they start prenup negotiations too late and miss the boat; sometimes it is because one of them is unexpectedly coming into money, perhaps an inheritance or a lifetime gift from a relative. Either way, postnups have the same legal standing if they are properly entered into. However, there is nothing that quite focuses the mind like a wedding date on the horizon! In my experience, it’s far better to get the issue resolved before you tie the knot!

At Awdry Bailey & Douglas we can help you prepare a prenuptial agreement that can stand the test of time. 

Contact Peter Berry on  01672 518620, or via email on peter.berry@awdrys.co.uk where he will be happy to offer a free until consultation or or visit our dedicated Family Law pages on our website.

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WELCOME TO THE AWDRY BAILEY & DOUGLAS ‘MEET THE LAWYER’ SERIES

OLIVER GRAY - OVER TO YOU…

  

TELL US A BIT ABOUT YOURSELF?

I am commercial solicitor working in ABD’s Marlborough office. I have a particular interest in business law and always love a challenge.

WHAT AREA OF LAW DO YOU WORK IN?

I work primarily in commercial law, which incorporates both commercial property and corporate commercial matters (business law). I do also however undertake additional work in high value and complex residential property matters and certain areas of Data Protection Law.

TELL US ABOUT  YOUR JOURNEY TO THE LAW?

Even before I began my A-Level in Law, I knew that it was the career I wanted to pursue.

After leaving school I completed my Law Degree at the University of Plymouth. I then completed my Post-graduate Diploma in Legal Practice at Bristol Law School (University of West England). This was shortly before I came to work at Awdry Bailey & Douglas.

During my time at ABD I initially began training with both the commercial and litigation departments and, after undertaking litigation work for approximately 7 months, moved from ABD’s Devizes office to Marlborough to focus solely on commercial work. Alongside my work at ABD, I have also completed a Masters Degree in Advanced Legal Practice, focussing on complex and protracted contract disputes and contract formation.

  

WHAT ARE 5 WORDS A CLIENT WOULD USE TO DESCRIBE YOU?

Practical – There will always be a need to look beyond the purely legal aspects of a matter in order to find practical solutions. 

Realistic – I have found it very important to manage my clients’ expectations and, particularly when negotiating, this is important to ensure that a reasonable and realistic approach is taken. 

Modern – the law is ever changing and it is important not only to stay up to date with this, but in a more practical sense, to take advantage of technological advances such as electronic submissions and registrations to ensure efficiency and cost effectiveness.

Diligent – given the significance in law of matters as seemingly insignificant as the type of punctuation used, I take a meticulous approach to my work.

Positive – involving solicitors can be fairly daunting, even for regular clients. I always try to keep a positive outlook and to inspire the same in my clients.

WHAT WOULD YOU SAY HAS BEEN YOUR CAREER HIGHLIGHT TO DATE?

My career highlights to date have certainly been my involvement in a number of very high value cases, both for company purchases and sales and in respect of development work on a number of sites in the UK. I found it immensely rewarding to be entrusted with such significant work and to have been able to undertake this alongside a team of hardworking and competent colleagues.

WHAT/WHO INSPIRES YOU?

Though a fictional character, I have always been inspired by Atticus Finch from To Kill a Mockingbird. I can recall reading an article in the Law Society Gazette whilst at university which extolled the virtues epitomised by Atticus Finch revolving largely around his patience, practicality, honesty and integrity.

WHAT DO YOU ENJOY TO DO OUTSIDE OF WORK?

Outside of work, I am a regular gym goer, hiker and have a particular interest in martial arts. I trained in Mixed Martial Arts for several years whilst at school, earned my black belt in Tae Kwon Do at 16 and continue to practice occasionally alongside my more recent interest in Aikido.

I am an amateur coleopterist (i.e. I collect and study beetles) with a particular interest in African flower beetles. I have been doing this for at least the past 5 or 6 years and have a formidable collection of Asian and African beetles. I have not however collected any specimens for over a year as I now prefer to photograph beetles instead.

I am also an avid reader and enjoy reading both fiction (generally fantasy) and non fiction (specifically Naval History) books.

Prenups … Sharing more than an intimate meal for two…

As unromantic as it may seem, over the past 12 months Peter Berry at Awdry Bailey & Douglas has dealt with more enquiries about Prenups than during the last 10 years.

Why are so many people looking at Prenups?

More than ever before, people are choosing to marry later in life. The number of weddings for men aged over 50, and for women aged 35 to 39 years has increased substantially. The figures for over 65s have increased by over 40%!   

For younger couples, social attitudes are changing and the number of family businesses and people who are self-employed continues to grow.  

So why might a “Prenup” be on your wedding planners list?   

Do you:

Own your home?

Run a business?

Have a pension?

Have savings?

Have children from a previous relationship and possibly grandchildren too?

Have you:

Received an Inheritance from your parents, or relatives?

Invested in rental properties, or made long term financial plans?

Sold your business, and looking to enjoy your hard earned cash?

Been divorced before, and worked hard to rebuild your financial security? 

If the answer to any of these questions is “yes”, then you should think about a Prenup. Starting a conversation about this is never going to be easy. Fears of arguments and embarrassment are entirely understandable. However, talking through the reasons often opens up a depth of conversation about feelings, wishes and about family. 

A Prenup is worth a lot more than the paper it’s written on. 

If the agreement is drafted by a specialist and adheres to legal requirements, you should expect to be bound by its terms as long as it is fair. 

At #ABDlaw we can help you prepare a prenuptial agreement that can stand the test of time. 

Contact Peter Berry on  01672 518620, or via email on peter.berry@awdrys.co.uk where he will be happy to offer a free until consultation or or visit our website.

Awdry Bailey & Douglas are proud to now be a Business Partner of WiRE (Women in Rural Enterprise).  

WiRE is a national business support network; promoting, supporting and developing its membership of rural businesswomen. Grown from an academic research project based in Shropshire, WiRE is now a national membership organisation, widely recognised as a dynamic and positive force within the economy of rural areas and as the voice of rural women’s enterprise in the UK.

Awdrys recently hosted a legal clinic for WiRE members covering aspects of Family, Employment and Commercial Law in order to provide members with a general overview of important considerations for business owners. Three members of the practice spoke:

• Georgina Catlin (Family Law) discussed the wide ranging topic of family law to include ways of protecting your finances      both pre and post separation/divorce;
• Jessica Arnold (Commercial Law) provided an overview of the various ways in which a business can be structured and discussed the key risks and benefits that individuals and companies should consider when deciding what business structure is right for them; and 
• Maxine Nutting (Employment Law) then talked about factors businesses and individuals need to be aware of in terms of whether their workforce or contractors may actually be considered employees and what that could mean for you from a legal perspective if something goes wrong.

Maxine Nutting from the Employment Team discussing the issue that 'workforce' and 'contractors' could potentially be considered as 'employees' in the eyes of the law

The Clinic also provided members with an opportunity to ask questions on an informal basis and many members took advantage of this opportunity.  

Following this, the group then enjoyed a cookery lesson hosted by The Farm Cookery School in Bromham and were able to feast on their creations over a networking lunch.

For further information about WiRE and their members please read our profile http://www.wireuk.org/members/georgina-catlin/

Family Businesses - Avoiding the Pitfalls

Twice in the last week alone, our Commercial Team have been asked to assist with problems involving family businesses. It can be extremely difficult for those involved and sadly the emotional stress can often result in family breakdowns. 

Frustratingly for us as advisors, it nearly always comes down to the same simple issues which are easily avoidable, so here are a few tips which you should follow:

1) Understand your duties as a director

It is quite common in family businesses for family members to be appointed as a director even though they may have little or no involvement in the business. This is often suggested by accountants for tax reasons. 

However, as a director it is essential that you know what is going on with the businesses on a day to day basis, especially where finances are concerned. Directors have certain duties and, in some circumstances, you may be held personally liable where those duties are breached. 

If you are a director of a family business:

• It is therefore essential that you understand your duties as a director and take them seriously. 
• Take the time to understand the finances of the business and make sure that obligations, especially to HMRC and the banks, are being met.
• If you are not able or willing to be involved, consider resigning, as personal liability cannot be escaped by pleading ignorance.

2) Be open

Family businesses often rely too much on trust, with people being left to their own devices without the checks you might expect in a normal organisation. When the business faces a challenge, this trust can become an enormous burden, often resulting in problems being covered up or understated, whilst attempts are made to fix the situation. 

Unfortunately the others may be unaware of the problems until debt recovery letters arrive, perhaps from a supplier, HMRC or even the bank looking to repossess the family home. By this point it is often too late to save the business and sadly, the sense of betrayal can lead to the breakdown of the family relationship too. 

To avoid this:

• Meet regularly to review the finances and ensure obligations are being met. 
• If there are problems, share them. There is more chance of a successful outcome if everyone is working on a solution. This is the benefit of having a board of directors.
• Implement checks to ensure that tasks are carried out properly and do not leave important jobs to one individual 

3) Agree it, document it

Family members often come to arrangements between themselves that are not documented. This may take the form of a loan or the transfer of shares and property. Because of the close family relationship, people often feel it unnecessary to document the arrangement and, 9 out of 10 times there will be no issues. 

However, what if the unexpected happens? How do you prove whether the transfer of money was a repayable loan or a gift, or that money paid was actually consideration for a property which has yet to be transferred? This can become a big problem in the event of divorce or death as it may have a significant affect on the distribution of assets. 

It is therefore important to take advice and document agreements properly. This may also provide important evidence when it comes to paying tax. 

4) Tell your advisors everything

Finally, there is no point seeking advice unless you tell your advisors everything. Accountants and solicitors can often help, but only if we know the full picture and understand precisely what you are trying to achieve. By withholding information you can create big problems. 

This was the case recently where we advised on a family situation. Money had been spent on taking advice from an accountant and a solicitor but both had been told one thing, whereas the family had actually agreed completely different terms behind closed doors. 

The tax saving they thought they had made paled into insignificance compared to the liability for other taxes they had not considered. Furthermore, following the death of one director, the others then disagreed over the term of the deal they had made and, because the terms agreed were completely different to the terms recorded in the documents, the agreement could not be enforced. 

No doubt the advisors could have found a solution that worked for everyone had they been given the full details and significant tax liabilities could have been avoided.

SUMMARY

Whilst these examples may seem unlikely, they will be all too familiar to those of us advising family businesses on a regular basis. 

By understanding your obligations, meeting regularly, sharing problems, documenting agreements and taking proper advice, you may reduce stress, save money and grow your business all without risking the most important thing, which is the relationship with your family. 

If you require advice on any of these issues please get in touch with Tom Paget in our Commercial Team on 01380 722311.

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Wasps Legends Rugby Golf Classic 2018

Awdrys Partners Tim Hotchkiss and Alex David attended the Wasps Legends Rugby Golf Classic 2018 in La Manga, Spain from 14-17 June in support of the Wasps Legends Charitable Foundation.  

L-R: (left to right) – Antony Bulley (MD of Strakers), Alex David, Tim Hotchkiss and Matt Powell (former Saracens, Harlequins Worcester scrum-half)

The Foundation is the fundraising element of the Wasps Legends Past Players Network and supports a charitable project each year that is close to the heart of the Wasps Legends teams, with small grants awarded to chosen charitable projects throughout the year and a main grant awarded annually.  

L-R: Tim Hotchkiss, Matt Powell (former Saracens, Harlequins Worcester scrum-half), Alex David and Antony Bulley (MD of Strakers) 

L-R: Tim Hotchkiss, Matt Perry (former Bath, England and British & Irish Lion full back) and Alex David

This is the second time that Tim and Alex have attended the Golf Classic.  The event involves three themed nights (as can be seen from the fancy dress in the photographs) and two rounds of golf with the chance to play with a rugby legend on each of those days.  Approximately 150 guests attended and a thoroughly enjoyable time was had by all, with initial reports confirming that well over £100k has been raised following this event alone. 

L-R: Tim Hotchkiss and Alex David with former Wales and British & Irish Lion No.8, Andy Powell

L-R: Alex David, Antony Bulley (MD of Strakers), Tim Hotchkiss and Peter Scrivener (founder of Wasps Legends and Trustee of the Charitable Foundation and former Wasps No.8)