The best business advice, opinion, news and expertise in Greater Manchester and further afield.

Friday, 18 June 2010

Guest Blog

Can a pre-nup save your business?

Lisa Kemp, Family Law Partner at Dennison Greer Solicitors

All you need is love as the Beatles once sang but, as Sir Paul McCartney discovered after his split from Heather Mills, when marriages break down you could find yourself with significantly less that you’d planned on.

The list of celebrities who are big fans of the pre-nup is as long as the list of clauses that appeared in the agreement drafted before Catherine Zeta Jones’ marriage to Michael Douglas which included the fact that she is guaranteed $2.8 million for every year of marriage, plus a $5 million bonus if he is caught cheating!

Even if you’re not an A list celebrity, the inevitable financial wranglings that arise in divorces are compounded when either party is a business owner. I’ve often seen the look of shock on even the most savvy business owner's face when the realisation hits that the value of their hard earned business is fair game as part of the financial settlement.

I know it might not immediately seem be the most romantic concept, but pre-nuptial agreements are becoming almost as much of an integral part of people’s wedding planning as choosing the first dance and booking the venue.

“Darling, we really should get that pre-nup sorted” probably isn’t most people’s idea of pillow talk but, although it isn’t the most hearts and flowers of concepts, it means that couples can enter into their marriages with a clear head and peace of mind about their financial situations.

Essentially, the content of a pre-nup is an agreement between people getting married about what should happen financially upon their divorce. Although they’re actually not legally binding in England and Wales, there have been a couple of landmark cases that have demonstrated the increasing seriousness with which they are being viewed. Everything is pointing to the fact that pre-nuptial agreements will soon be treated as binding in the courts.

To ensure you protect your business given the nature of a pre-nup there are a few pitfalls that need to be avoided to make sure the court doesn’t disregarding the agreement. If it could be argued that one party has been placed under duress or misrepresentation is evident then it could be completely dismissed in the divorce settlement.

The best way to see if a pre-nup is right for you is to consult a solicitor for a free initial consultation and find out exactly what it entails before going away and discussing it with your intended. The clients I’ve met in this way have often been amazed about how much it can help protect their business.

The court will retain the power to ignore or vary the agreement but the clear message to people entering into a pre-nuptial agreement is that it is more likely than ever that they will be held to its terms.

If you’ve got a business to protect, then it’s one extra precaution that you can only ignore at your peril. Plus, it’s a sure fire way to wheedle out the gold diggers, unless you’re planning on marrying Catherine Zeta Jones that is!

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