PERSONAL FINANCE: Putting a Price on Love; Special Correspondent Richard McComb Talks to Leading Birmingham Divorce Lawyer Joan Price, of Divorce and Family Law Practice, about the Pluses and Pitfalls of a Pre-Nuptial Agreement
Byline: Richard McComb
It may not be the most romantic gesture in the world - going down on bended knee to propose marriage before advising your sweetheart to take independent legal advice.
However, it is a scenario facing an increasing number of professionals and business people who are seeking to protect their assets from the vagaries of failed love, philandering spouses and good old-fashioned gold diggers.
Seeking a pre-nuptial agreement, once the preserve of Hollywood actors and rock stars, is becoming increasingly common among company bosses and financially independent suitors.
Rising personal wealth, complex pension arrangements and soaring property values all mean couples need to be acutely aware of the modern-day price of love.
"Wealth is prevalent these days and it is easy to lose. One of the easiest ways to lose it is divorce," warns Joan Price, a partner in Birmingham's Divorce and Family Law Practice (DFLP).
Figures from the Office of National Statistics suggest fewer couple are divorcing after less than five years of marriage. In 2003, the latest year for which figures are available, the number of couples divorcing in England and Wales after less than five years was 27,511 - down from a record 37,252 in 1993.
But rather than pointing to a harmonious state of marital arrangements, the trend is thought to illustrate the fact that couples are toughing it out in unhappy relationships because they can no longer afford to buy a home of their own. In this sense, it is a case of "later" rather than "sooner" that people have realised the need for a cool-headed approach to the business of marriage.
DFLP, in Caroline Street, off St Paul's Square, is in the Legal 500 clients' guide of the country's top practices and specialises in high-value divorces.
Miss Price, a Deputy District Judge and a former chair of the West Midlands Committee for Resolution, says: "The difficulty in entering marriage is, do you approach it by means of making a logical, rational decision regarding the preservation of assets - in other words, do you use your head? Or are you led by the heart?
"You can be a hard-nosed businessman and find yourself in all sorts of trouble because you haven't used the same criteria when dealing with your prospective spouse."
Although a pre-nuptial agreement does not guarantee a prescribed divorce settlement, provided it is dealt with properly it can be hugely influential and will be given due consideration by judges, helping to strip out acrimony and limit the fall-out of financial uncertainty.
If prospective spouses want to stand a chance of protecting their wealth they must sign a mutually agreed pre-marital contract, according to Miss Price.
"Pre-nuptial agreements do not have statutory protection in the sense that if you enter into one of them the divorce court will automatically be compliant with the terms of the agreement," says Miss Price.
"However what case law has made clear is that great weight will be attached to a prenup agreement if both parties have separate legal representation and they fully disclose their financial means.
"There should also be provision for a review period, after say three years, to take account of any change of circumstances.
What we are really talking about here is children. Pre-nuptial agreements can be scuppered if children come along and no consideration has been given as to how that affects the overall package."
Miss Price accepts the process can be fraught with emotional considerations. She says: "if you have just proposed, do you say in the next sentence, 'I'd like you to take some separate legal advice on this matter'? It doesn't really go down well, does it?"
Crucially, a valid pre-nup requires a full disclosure of each party's financial circumstances. …