Pre-nups and Cohabitation Agreements: are they worthwhile?
Pre-nuptial agreements (pre-nups) are not just for celebrities and the super-rich, they should be part of your financial planning for your future lives together. Pre-nups are not legally binding in UK law (yet), but they are frequently taken into consideration by judges in financial cases and contested divorces.
Finance, not romance
We admit, a formal prenuptial agreement may not be the most romantic of arrangements to make before your wedding or civil partnership. However, a pre-nup offers the very positive benefit of giving each partner the opportunity to define their own assets that they bring to the relationship before they are shared through marriage. For example, you might have inherited items you wish to keep in the family, or have built up assets in your own name. At it’s most straightforward, the pre-nup gives a snapshot in time of the assets of each of you in the relationship, which can act as a benchmark as you move forward together. They are also particularly relevant in second marriage cases.
Pre-nuptial agreements for children
Where pre-nuptial agreements really come into their own is when you have children from a previous marriage and wish to preserve their inheritance. With the recent changes in inheritance law, your pre-nup should also be drawn up in tandem with your will, to make everything watertight.
If you decide to live together but not get married, you should draw up a Co-habitation Agreement, which can protect your assets in the event that the relationship does not work out. It is important to remember that there is no such thing as a ‘common law spouse’, and if you stop living together due to a breakup, you could be in an uncertain position regarding assets such as property, joint assets and joint bank accounts. A co-habitation agreement can also help you avoid expensive legal costs in trying to reclaim what it rightfully yours.
We’re as curious as the next person when it comes to pre-nups, so here are just a few celeb examples:
- George Clooney and Amal Alamuddin – did they or didn’t they have a pre-nup? No proof either way has emerged, but with Clooney valued at $220m and Alamuddin a highly experienced lawyer, we’ve be very surprised if something wasn’t written down somewhere!
- Hedge fund superstar Ken Griffin is worth a cool $5 billion (yes, you did read that right). When he married Anne Dias in 2003, she signed a pre-nuptial agreement that was based on his then $825 million fortune, but in divorce proceedings this year she claimed that she signed under duress. If the existing pre-nup stands, she will be entitled to assets totalling just 1% of her husband’s net worth. However, given that this is about $50 million, it’s a sum some of us could learn to live with…
- The actress Jessica Biel was said to have stipulated in her pre-nup that if her husband Justin Timberlake cheated on her, she would get a divorce and $500,000.
- Khloe Kardashian’s pre-nup reportedly gave her $500,000 for each year of marriage, $25,000 per month support, $5,000 for shopping and $1,000 for beauty care. And the house. And a new car every time the lease on the old one expires. The phrase ‘high maintenance’ comes to mind….
- In the original pre-nup before her wedding to Tiger Woods, Elin Nordegren signed for a $20m sum, if they remained together for 10 years or more. However, faced with Woods’ infidelity scandals, she had the pre-nup rewritten and was awarded $750million.
- Considering their joint worth, the pre-nup between Beyoncé and Jay Z is modest: she would reportedly receive $1million for each year of marriage, up to maximum of 15 years.
- When film director Steven Spielberg split with wife Amy Irving, the judge ruled that a pre-nup agreement was invalid because it had been jotted down on a cocktail napkin!
According to the New York Post, NYC lawyers are increasingly seeing unusual stipulations in pre-nups, such as:
- “Four home-cooked meals a week or the wife loses her shopping allowance in New Jersey”
- “No piano playing while the husband is home”
- “If husband is rude or cruel to wife’s parents, husband agrees to pay $10,000 for each infraction.”
However, there is good news from New York celebrity-divorce lawyer Nancy Chemtob, who says that: “Out of all of our prenups, 90 percent are still married.”