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With all my worldly goods I thee endow (but first sign here!)

The divorce of the McCartneys has kept us enthralled over the past few months. It would be interesting to ask the public to vote on how much of Sir Paul’s fortune should be given to Lady McCartney. Many would undoubtedly say ‘nothing’, while others would take the view that because they have a child together that he is morally bound to provide a good standard of living for both of them.

Would the situation be different if they had entered into a Pre-Nuptial Agreement, which is a form of contract? These agreements are commonplace in the USA, particularly where there is a disparity between the assets of the future husband and wife. We can remember the speculation in the press about Catherine Zeta Jones and Michael Douglas and whether he wanted to protect his vast wealth in the event that their marriage didn’t survive. More recently, the celebrity gossip columns have covered Britney Spears’ marriage breakdown. Whilst she may not always look her best in press pictures, the message is that she is a very astute businesswoman whose assets were tightly secured by a pre-nuptial agreement.

The past six years or so have seen a significant shift in the approaches of the English courts towards the division of assets in larger cases, where the court will consider the yardstick of equality and then, taking into account a number of factors including the length of the marriage, the number of children, the financial contribution made by each party, will decide whether or not an equal division is appropriate.

Given the trend of recent English cases, we increasingly find that people are looking at ways of protecting their assets in the event of a marriage break-up. Everybody expects their marriage to work, but the thought of having to hand over half of one’s assets if the marriage fails within a couple of years is a thought that may clients find terrifying. It is only natural to want to protect your assets from claims and Pre-Nuptial Agreements are seen as a good way of dealing with this.

Jersey Courts have traditionally followed the British approach towards these agreements, which is that they are not valid because they offend the sanctity of marriage. To have an agreement which contemplates the breaking up of a family was thought to be immoral and contrary to the public interest.

It is an accepted fact that nowadays nearly half of marriages end in divorce. So have we reached a point now where the public interest has shifted so far that that law should now reflect true life and recognise these agreements? There certainly seems to be a move in that direction, although it cannot be said with certainly that the courts will accept Pre-Nuptial Agreements as binding. It appears that the UK courts are moving increasingly in line with rest of Europe and that Pre-Nuptial Agreements are carrying more weight.

In a recent leading UK case, the court accepted a Pre-Nuptial Agreement as valid, but the facts of that case were quite unusual, in that the bride was worth around £1m and the husband anything between £25 and £150 million. The husband was pressurised into marrying the bride quickly because she was pregnant, so he insisted on a pre-nuptial agreement. In that case, the pre-nuptial agreement favoured the husband and the behaviour of the bride’s family was a factor in her not achieving a higher settlement.

It is difficult for us to predict what approach the courts in Jersey would take if presented with a Pre-Nuptial Agreement. There is a groundswell of opinion that if an agreement is drawn up in good faith and is entered into willingly by both parties and that both parties have taken professional advice, then it will be likely to carry some weight with a court – a court would see the agreement as reflecting what they were contemplating as being a sensible settlement.

However, a court will still have to exercise its jurisdiction under the law and in doing so will have take into account a number of factors. For example, if the couple have children, then a court would almost certainly start to disregard a re-nuptial contract.

In the past there has been a difference between the approach in the UK and that in Europe and America. Historically in Europe there has been an accepted principle that any property which owned before marriage or which has been inherited by a person during their marriage is not taken into account in an later divorce. However in England and Wales all of the assets of the couple are brought into account – which on the case of somebody in Sir Paul McCartney’s position could be devastating. The attraction of a prenuptial agreement is very obvious here, however a court would take into account the fact that where there is such disparity between the relative bargaining positions, one party can easily be ‘bullied’ into signing it.

Another approach increasingly being considered is the use of trusts to protect assets which were owned before the marriage. This involves one of the parties giving some of their assets to trustees. That person no longer has ownership or control of the asset and it cannot therefore be brought in as part of the family assets in the event of divorce. Trusts are a very powerful tool in protecting assets and preserving them against claims for the benefit of future generations. But again, the courts in England have begun to look closer at the operation of trusts of this kind.

Given the fact that half of marriages end in divorce, we are often asked to advise on the options for protecting assets against divorce claims. We believe we are going to be increasingly busy in preparing Pre-Nuptial Agreements and trusts, although for a while yet they will always be presented with a health warning – that is, we cannot guarantee they will be followed!

THIS ARTICLE IS FOR INFORMATION PURPOSES ONLY AND NOT BY WAY OF LEGAL ADVICE. PROFESSIONAL LEGAL ADVICE SHOULD BE SOUGHT BEFORE ANY ACTION IS TAKEN.