A Legacy Intact: safeguarding your family business in the event of divorce - Book - Page 62
We have seen a huge increase in the
and
more
frequently
use of PNAs over recent years and
relationships
commentators in this area believe
agreements
forming
already taken place so there is little
sufficient assets of their own to meet
nuptial
incentive on the financially weaker
their needs. This raises the question
commonplace.
party to enter into an agreement
again that if the shareholder has
which
to
little to nothing in the way of assets
where
are
that they are likely to become more
is
undoubtedly
going
common and used in much the
The requirements for a valid and
restrict or limit their entitlement on
outside their shares in any family
same way as they are in continental
binding PNA in this country are
divorce. Conversely, the focal date of
business, from what resources will
Europe (i.e. standard practice on
now well established. The law on
an impending wedding tends to give
they provide for the spouse? Equally
marriage) in years to come. This
PNAs is now mature and developed
parties the impetus to complete a pre-
challenging is a situation where a
may be due to people marrying later
so that PNAs, if entered into and
nuptial agreement. Having said that,
party has not yet inherited any shares
(for a variety of reasons including
compliant
criteria,
there will be circumstances where it
but expects to do so in the future but
focusing on their career/economic
ought to be regarded as binding,
is simply not possible to put in place
has little or no other wealth at the
uncertainty) so by the time they get
in the sense (and this is the key)
a pre-nuptial agreement in advance
time of signing the PNA.
married they have amassed pre-
that a well-constructed PNA will
of a wedding and in such instances,
marital property they want to protect.
exercise a powerful influence on
it would be wise to consider seriously
An agreement which is manifestly
Those with family assets to protect
the Family Court which may well
the idea of entering a post-nuptial
unfair to the financially weaker
are keen to ensure that they pass
therefore be inclined to abide by its
agreement.
party will not be upheld. Therefore,
down the bloodline rather than face
terms. Dynastic family businesses
claims from a spouse on divorce
should therefore seriously consider
PNAs do not, however, oust the
will be no provision on divorce, but
which has the capability of involving
introducing a policy of PNAs for
jurisdiction of the English Family
is likely to assist in ensuring that
other family members if they too
family members as a standard
Court which retains discretion to
the payment is not as much as it
have shares in the family business.
matter of good practice.
depart from its terms. To give a PNA
would be if determined by a judge
the best chance of being upheld, it
in matrimonial proceedings without
Lamentably, divorce rates continue
Post-nuptial
carry
must be fair to the financially weaker
such an agreement in place.
to rise and those entering second
the same weight as pre-nuptial
party. Therefore, it would not be
or third marriages often want to
agreements in the eyes of the law.
possible for the financially stronger
protect
previous
However, it is generally considered
spouse simply to ring-fence all of the
marriage(s), in addition to pre-
to be more challenging to get a
assets in their own name and provide
marital wealth. Finally, people are
post-nuptial agreement ‘over the
nothing to the financially weaker
far
mobile,
line’ than a pre-nuptial agreement -
spouse on a divorce if the financially
countries
primarily because the marriage has
weaker
children
more
moving
from
internationally
between
with
certain
agreements
a PNA does not mean that there
spouse
does
not
have
FOR A DYNASTIC
FA M I LY B U S I N E S S ,
A CONSISTENT
POLICY ON PRE- AND
P O S T- N U P T I A L
AGREEMENTS FOR
FA M I LY M E M B E R S I S
A MATTER OF
STANDARD GOOD
PRACTICE
