There’s been a similar trend among directors anxious to protect their businesses.
Marital agreements such as pre-nups or post-nups set out in advance what should happen if the marriage ends in divorce. They can cover a wide range of topics but mostly they describe how the couple’s money should be divided if they separate.
The price of agricultural land has doubled over the last five years to an average of £6,000 an acre. It means a divorce settlement could be much higher now than in the past.
To fund such a settlement, farmers could face the prospect of having to sell some of their land, or trying to borrow money at a time when banks are reluctant to lend. Either alternative could affect the viability of the business.
The answer for many farmers is to negotiate agreements that are fair to both sides without jeopardising the value and integrity of the inherited family property.
There has also been an increase in the number of people from other professions using marital agreements, particularly among company directors. Like farmers, many people running family businesses don’t want to see the firm’s viability threatened by money being taken out to fund a divorce settlement.
Many business owners are also asking their children to draw up pre-nups. This is seen as a way of protecting family interests many years down the line after the children have inherited the firm.
Some companies are urging all their directors to draw up agreements. They don’t want to find that a director suddenly has to sell his or her interest in the business because it could be very damaging and destabilising – especially in difficult trading conditions like those we’re experiencing now.
Another reason for the growing popularity of marital agreements is that they’ve been put on a firmer legal footing following the much publicised case involving German heiress Katrin Radmacher and her former husband Nicolas Granatino.
Until then, agreements would be taken into account by the courts but they were not binding. In the Radmacher case, the Supreme Court ruled that although the courts were not bound by such agreements, they should generally be considered binding as long as they are fair and entered into freely by both husband and wife.
It means both parties can be confident that if they enter into a pre-nup that is fair, and both disclose all the relevant financial information in advance, then that agreement will be upheld by the courts. This has convinced many people who were previously sceptical that it is now worthwhile to draw up a marital agreement.
Please contact Charles Goodbody in our Warminster or Westbury offices on 01985 214444 or 01373 865577 or email@example.com if you would like more information about Pre-Nuptial agreements or any aspect of Matrimonial and Family Law.