Is money a hindrance or a help when it comes to relationships?
The romantic view of relationships is that wealth shouldn’t play a factor in the decision to spend your life with someone. However, in reality, issues such as financial stability and the ability to provide a steady home for children are often extremely important when it comes to choosing a partner. When monetary circumstances change drastically during a marriage – whether for better or worse – this can often have a significant effect on the relationship itself and sometimes leads to break up, for a whole variety of factors.
The rise of nuptial agreements as a way of easing financial uncertainty
Wealthy actors, musicians and other celebrities, who are often renowned for their tumultuous relationships as well as their substantial assets, have traditionally signed pre-nuptial agreements (pre-nups) before tying the knot. Possibly as part of the adoption of celebrity culture within mainstream society, pre-nups have been growing in popularity amongst private individuals from a whole array of professions and backgrounds. Knowing what will happen to any shared assets often gives confidence to husband and wife if their marriage hits rocky waters.
Sudden wealth can cause as many waves as sudden loss
A couple who have been together for many years can have their lives turned upside down if one of them receives a significant inheritance or otherwise comes into a substantial amount of money. This can have as much of a devastating impact upon a relationship as the inconvenience of the loss of assets or entering into debilitating debt or bankruptcy. In these cases, husband and wife may decide to enter into a post-nuptial agreement as a way of resolving the practical issues in case they separate further down the line.
What are the financial practicalities of divorce?
Although prenuptial and postnuptial agreements go some way to showing the intentions of both parties, ultimately it’s up to the courts to decide how to distribute any shared wealth in a divorce. However, following the Supreme Court decision in the case of Radmacher v Granatino, judges are required to uphold any agreement if it can be shown to be fair. Furthermore, the Law Commission recently published a report recommending that nuptial agreements are made enforceable. This was supplemented by a Private Members’ Bill – The Divorce (Financial Provisions) Bill – which would have the same effect. The bill is being considered by Parliament and could potentially become law, leading to greater certainty for married couples trying to arrange their financial affairs.
Muna Saleem is an associate at Crisp & Co.