Are you wondering how to protect assets before marriage? While tying the knot is a time of optimism and excitement, there are a few risks for individuals who are bringing significant wealth into their relationship. Some spouses-to-be might prefer to avoid the subject of ‘what if?’, choosing instead to preserve the happy glow of imminent wedlock. However, far from being a mood-killer, these conversations can actually give everyone a sense of clarity — and create a more solid foundation to build upon.
Taking steps to protect your financial best interests could ensure that your most valuable assets are secure from future divorce claims. If your life’s work includes features like businesses, foreign properties, or significant savings, this is your opportunity to aim to ring fence them for yourself and future generations.
This guide covers the forms of asset protection at your disposal before you start your next chapter. From prenuptial agreements to trusts, we’ll reveal everything you should know to look to the future while enjoying the present.
How to Protect Assets Before Marriage
There are a few options for anyone wondering how to protect assets before marriage. Prenuptial agreements can clearly outline ownership of possessions you’re bringing into the relationship. Meanwhile, if inheritance is your priority, you can aim to provide for beneficiaries via a trust. However, your first step should always be to obtain legal guidance tailored to your situation.
Speak to a Family Law Solicitor
For some couples, the need for a family lawyer will only arise when difficulties begin. However, if you’re bringing precious assets into a relationship, precautionary steps could save you a lot of expense and anxiety down the line. Once your solicitor understands your objectives, they’ll be able to outline the best ways to achieve them.
It’s important to note that, because every relationship is unique, copy and paste advice just isn’t practical when it comes to asset protection. For every spouse who wants to protect their business, there will be another who is more concerned about their portfolio of foreign properties. An experienced family law solicitor will listen carefully to your situation and objectives before outlining the most appropriate forms of asset protection for your circumstances.
Consider Prenuptial Agreements
Although they don’t (yet) have full legal recognition in England and Wales, prenuptial agreements — or prenups — have gradually become a more popular way to protect assets before marriage. Essentially, this document outlines how both parties have agreed to split their possessions in the event of divorce. The clarity they provide means that courts increasingly refer to them when dividing assets.
In some circles, prenuptial agreements are still seen as being the preserve of celebrities and high profile entrepreneurs. However, they can be extremely effective in many scenarios, as they commonly cover even conventional possessions, such as property, pensions, and savings. Therefore, anyone contemplating how to protect assets before marriage may regard prenups as the ideal way to attempt to conserve their most valuable belongings.
What Goes into a Prenup?
If protecting assets before marriage is a priority, it’s vital that you understand what can be included in a prenup. Although the everyday assets you’ve accrued over time will feature highly, this document might also cover individual debts, and features of high net worth relationships, such as family business interests, investments, overseas properties, and life savings.
In general, prenups may include any of the following features:
- Pre-Acquired Assets: You can include any possessions you’ve brought into the relationship. Although ‘ring-fencing’ isn’t a failsafe strategy, it could be your best chance to retain control over any assets that were the result of your own hard work.
- Details of Future Division: Deciding how to share joint belongings is often one of the most contentious aspects of a separation. Outlining how you intend to do this when relations are positive can make the divorce process much quicker, cheaper, and calmer — should it come to that.
- Division of Debts: If your partner came into wedlock with significant liabilities, a prenup can ensure that the debt remains their responsibility, should you choose to separate.
- Businesses: The courts prefer not to divide a family business in divorce. However it can sometimes happen. Detailing what should happen to a company in a prenup can ensure that it is considered to be the property of its original owner.
While a prenup can be an appealing form of asset protection, it won’t automatically be upheld in court. For it to carry any legal weight, it will need to have been entered into freely, with both parties having provided full financial disclosure to ensure that the terms are fair. Finally, both people will need to have obtained reliable legal guidance, and it will need to have been signed 28 days (or more) before wedlock.
Put Your Assets into a Trust
Creating a trust to ring fence possessions is an appealing strategy for individuals who are concerned about inheritance. Assets can be placed into the trust, which will technically no longer be owned by the person who set it up (the settler). Instead, its contents are managed by an impartial trustee, to ensure that it only benefits specifically-chosen beneficiaries, at a time of the settler’s choosing.
Using a trust to protect assets in the event of divorce is especially appealing for anyone who has children from a past relationship. They provide a structured way to distribute assets in your chosen time frame. Vitally, they can also shield its contents from financial claims by future spouses, if the settler’s marriage ends in divorce.
However, there are risks for future spouses who are considering using a trust to protect assets in divorce. Specifically, the courts will be keen to determine that the fund wasn’t designed with the sole intention of denying your future spouse a fair share if and when the relationship ends. Should they come to the conclusion that this was the case, they have the power to vary — or even disregard — the trust.
If a trust is set up prior to entering a marriage it is still advisable to have a prenuptial agreement — and disclose the existence and purpose of the trust in the prenup itself. This will limit any challenge to that protective wrapper in the event of divorce.
Ultimately, the courts in England and Wales can consider a range of options to ensure that the eventual settlement is fair for everyone. Therefore, if there is any doubt about your intentions as the settler, or there aren’t enough assets to divide equally elsewhere, a trust can still be divided to ensure parity.
Bespoke Asset Protection with Lowry Legal
Reliable legal guidance is a necessity when you’re considering asset protection. This can be a challenging area of law, so it’s vital that the guidance you obtain is well-considered and tailored to your specific objectives. Although you might already have an outcome in mind, there could be a range of ways to achieve this, depending on your situation. With so much at stake, it’s important that you don’t leave anything to chance.
Lowry Legal’s position as a leading family law firm means we know how important it is for you to protect your assets before marriage. Thanks to our specialism in high net worth divorce cases, we’ve helped high profile figures and business owners alike to create comprehensive trusts and nuptial agreements. We’ll take the time to understand you, so we can employ the most suitable strategy to get your desired results.
Contact one of our experienced solicitors today to discuss your case.
