Nuptial Agreements and Wills
  • 21st May 2018
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Couples who marry or enter into a civil partnership may also enter into a nuptial agreement to set out how their  assets  are to be taken into account in the event of later divorce or separation. Whilst the terms of the agreement are not automatically absolute, the aim is to ensure those wishes are taken into account by the Court.

A question can then arise, as to whether or not the parties had intended, at the time of making the agreement for the terms to be reflected on their respective deaths, as it can be argued that the death represented the ending of the relationship. Ether way, the agreement would not dictate the terms on how that party’s estate is distributed on their death. Instead, the estate would be distributed in accordance with the terms of their Will or the intestacy rules if they do not have a valid Will in place (the intestacy rules are pre-determined rules by law which take effect when someone dies without a valid Will or an existing valid Will fails to fully distribute a deceased person’s estate). 

Therefore, unless the party has taken the appropriate professional advice on their succession planning and has an up-to-date valid Will in place, a number of issues may arise on their death. Just some of the potential issues that may arise are highlighted in the following example:

Case Study

Jack was previously married to Rosie and they had 1 son, Harry. Rosie died in March 2012 and under the terms of her Will she left everything to Jack, including a property she had been left by her late mother. Before Rosie’s death they had all moved into the property and were using it as their main residence.

Jack subsequently met Molly who later moved into the property. Jack and Molly married in May 2016. Jack wanted to ensure he could protect the capital of the property for Harry insofar as possible. To reflect this, Jack and Molly entered into a nuptial agreement to reduce the risk of the property being taken into account in any future divorce proceedings between them.

Jack subsequently dies in March 2018 without leaving a Will. Jack’s estate is therefore to be distributed in accordance with the intestacy rules. This means that Molly is entitled to all of Jack’s personal possessions, £250,000 worth of his estate absolutely and one half of any remaining amount of that sum . Harry is only entitled to the other half share of any remainder of Jack’s estate. Unfortunately Jack’s estate is only worth £240,000 and the majority of this is made up by the property. Harry therefore receives nothing.

Amongst other issues that may arise, such as Harry’s occupancy of the property, the main issue is that Jack’s wish for the capital of the property to be preserved for Harry is not seen through. Molly is now free to deal with the property as she wishes, including intentionally or unintentionally disinheriting Harry through alternative provision under any Will of her own, which would be increasingly likely if Molly was to remarry in the future.

Harry would have options available to him to claim provision from Jack’s estate under a piece of legislation known as the Inheritance (Provision for Family and Dependants) Act 1975. However this is both costly, requires Harry to show a number of determining factors and brings no guarantee of success.

The below variation to the above example shows how Jack could have reduced the risk of the above issues arising:

Let’s say Jack had taken professional advice to make a Will in June 2017. Jack was happily married to Molly at the time, but still wished to preserve the capital of the property for Harry. Jack would have been advised of the various options available to him to allow Molly a right to continue living in/having the benefit of the property whilst preserving the capital for Harry. Molly would have similar options available to her under the Inheritance (Provision for Family and Dependants) Act 1975 if she was not happy with this arrangement on Jack’s death, but Jack’s provision under his Will would significantly reduce the risk of any issues arising which may cause her to go down this route.

The above example is just one of a number of different scenarios that could arise on death. It emphasis the importance of parties to a nuptial agreement, or any person that may deem their circumstances to be simple or complex, to seek professional advice to ensure provision is in place on their deaths that reflects their wishes.

If you would like to discuss succession planning or provisions for your Will then please get in touch with the Tax and Estate Planning team.