PRE-NUPTIAL PROTECTION
Book Your Free ConsultationIn countries such as the UK where there is no fully enforceable concept of pre-nuptial agreements, it is wise to construct one’s affairs in such a manner that assets are properly protected. This is especially important where one party has significantly more assets than the other at the time of marriage. Why? Well, the simple reason is that UK courts are far more generous when sharing assets between divorcing parties than in most civil law countries. In fact, London has often been referred to as the ‘divorce capital’ of Europe because of its courts generous distributions.
THE DIFFERENCE BETWEEN CIVIL AND COMMON LAW JURISDICTIONS
Spain, France and most other civil law jurisdictions generally offer two financial options at the time of marriage namely, to keep assets separate or to join them. In addition, whilst generally relatively generous to children, distributions – even when assets have been joined – are generally much lower than in countries such as the UK. This is especially the case with respect to the very wealthy with a large number of business assets. Where the election was made to separate assets, the wealthy partner generally has little to worry about financially should a divorce happen.
WHEN DOES AN ENGLISH COURT HAVE JURISDICTION IN A COURT CASE?
The courts in England and Wales (Scotland is a different jurisdiction) require that an applicant shows that they are habitually/ordinarily resident or domiciled (a term that is more complicated than you may think in English law but having a UK passport would infer domicile) in the UK. To demonstrate this one of the following criteria should apply, namely:
- Both spouses are habitually resident in the England and Wales.
- Historically both spouses where resident in England and Wales and one still remains resident in the jurisdiction.
- The Respondent is habitually resident in England and Wales.
- The Applicant is resident in England and Wales and has lived there for at least 12 months.
- The Applicant is domiciled in England and Wales and has lived there for at least 6 months.
- Both spouses are domiciled in England and Wales – This has no residence time frame.
WHAT MEASURES CAN BE TAKEN TO PROTECT ASSETS/WEALTH?
A properly established asset protection trust or private interest foundation can protect existing assets be it for the wealthy partner marrying or by way of protecting existing family assets should a child marry in the future. However, setting up such structures often involves complicated tax matters and should be understood and discussed carefully before proceeding. Nonetheless, it is well worth considering such structures as very often the benefits can be great.