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Parental Guidance: Prenups and The 'Bank of Mum and Dad'

One of the most fascinating aspects of working in Family law is that you are able to discern subtle, gradual changes which, over time, amount to significant shifts in the dynamics at play within Britain’s homes.

Among the more recent has been the way in which couples have adopted what I would describe as a more pragmatic approach to their respective finances in advance of their transformation from fiancés to spouses.

That realism is founded on the knowledge that many marriages sadly end in divorce. The most recent figures made available by the Office for National Statistics (ONS) suggest that more than 40 per cent of marriages are brought to a legal rather than a natural conclusion.

Myself and my colleagues in JMW’s Family team have reported in the recent past how an increasing number of individuals adopt prenuptial agreements (http://www.telegraph.co.uk/news/uknews/12011714/Divorce-rate-at-lowest-level-in-40-years-after-cohabitation-revolution.html).

It’s a development which we have tracked over the last six years in particular, since the Supreme Court decided that a prenup signed by a former banker, Nicolas Granatino, should prevent him from claiming a larger share of the fortune belonging to his ex-wife, the German paper heiress, Katrin Radmacher (https://www.theguardian.com/law/2010/oct/20/banker-fails-challenge-prenup-heiress ).

That ruling gave the documents added weight when it came to determining how marital assets should be divided.

As more people have appreciated the benefit which prenups can have in simplifying that process and defusing the potential which it has for generating tension, we have seen a rise in clients drawing them up.

A contributory factor is the proportion which now arise from the recommendation of spouses’ own parents, some of whom have themselves been through one or more divorces.

Those cases have more than doubled over the last 12 months as parents become keen to protect their children from unseemly divorce disputes and ringfence any support which they may have provided to enable sons and daughters to get a foothold on the property ladder as house prices climb and lenders remain cautious.

As I have pointed out to the Daily Mail (http://www.dailymail.co.uk/news/article-3792132/Rise-prenups-protect-Bank-Mum-Dad-parents-bride-groom-want-safeguard-investments-children-s-homes.html), some mothers and fathers are reluctant to entertain the prospect of this financial backing being claimed by a child’s ex.

That’s especially true in the case of those individuals who have even remortgaged their own homes to fund a child’s property. They regard their support as something of an investment in their sons’ or daughters’ futures not their children-in-law.

From being considered the preserve of the very wealthy less than a decade ago, what we’re seeing underlines how a prenuptial agreement is now almost as routine a part of wedding planning as buying a cake and choosing a dress.

Unfortunately, although it offers a practical way of addressing an issue which can represent a sensitive obstacle for couples to overcome, it is only something of a marital insurance policy and can’t guarantee the spouses any greater chance of staying together in the long-term.

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