Julian Knight: Why I'm wedded to this shake-up for the pre-nup
The current deals that couples make before they marry aren't worth the paper they're written
Saturday 01 March 2014
It is very strange that an agreement entered into by two adults of sound mind is allowed to be ignored by the courts.But that is the case with pre-nuptial agreements in this country.
As a result, divorce lawyers are not able to advise their clients whether the pre-nuptial agreement they have signed is actually worth the paper it is written on. It really is up to the whim of the judge on the day. Now the Law Commission has advised Parliament that a new law is needed to make pre-nups binding, taking out the courts’ wriggle room.
Many have the idea that pre-nups are a rich persons’ ploy and certainly the landmark case of German heiress Katrin Radmacher, who had her pre-nup upheld in 2010, adds credence to this idea.
However, pre-nups could help to both ease separation and ensure that individuals enter into matrimony knowing exactly where their finances stand.
Often the ignorance relating to finance and marriage and relationships is startling. For instance, very few people I encounter know that a will made before marriage is voided by the nuptials.
As for unmarried people living together, there is still a widespread belief that there is such a thing as common-law wife and husband rights – there is no such thing (although some campaigners have called for a change in the law).
I know someone who was married but recently widowed and is now facing legal action from the parents of the deceased husband over an alleged sum given to their son prior to the marriage used as a deposit for a home.
The rights and wrongs of the case don’t concern me here, but if a pre-nuptial agreement had been in place then perhaps some account could have been taken of this money or at least it would have reinforced that the cash was for both of their benefits rather than just the deceased son’s.
Pre-nups could also help to flag up the need for couples to have a will drawn up to avoid just such disputes if the worst happens.
However, there are dangers in pre-nups as in any legal document, and one of these is in the drawing up of the document.
I am seeing an increasing number of horror stories about so-called will- writing firms that charge seemingly cheap prices for their work but either forget crucial aspects of the law – such as that beneficiaries can’t be a signed witness to a will – or even write themselves into a will as an executor as a means to extract huge fees in the future.
If pre-nups move from being a rich persons’ option then let’s avoid the pile ’em high, sell ’em cheap approach of some less scrupulous will writers.
All in all, though, clearing the legal path for pre-nups is a real positive.
Dotty over dotcoms again?
The huge valuation given to AO is starkly reminiscent of the dotcom boom of the late 1990s. AO, an online electrical retailer, is now within touching distance of Dixons’ market capitalisation. This is despite the fact that AO only enjoys a small fraction of Dixons’ turnover.
Although AO is a much sounder proposition than the now infamous Boo.com, the collapse of which signalled at least the bursting of the dotcom bubble this side of the Atlantic, I am becoming increasingly worried by the market’s valuation of all things online.
Of course online should spearhead a company’s strategy, as ASOS shows us, but when you look at share prices racing away from a company’s numbers it is a little worrying.
Fortunately, in one crucial way it doesn’t feel like 1999 all over again and that is because small investors are relatively absent from all this.
Back in 1999 technology funds were receiving such an enormous inflow of cash from private investors wanting to make their fortune from dotcom firms that managers could barely find things to do with all the cash. One company had so many ISA applications that it hired a helicopter to carry them from Canary Wharf to their head office.
The technology fund manager I spoke to this week said we are still a long way from that. But perhaps when that starts to happen is the time to head for the market exit?
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