In recent years, marriage rates have declined as divorce rates have increased. This shift raises an important question: “are people increasingly hesitant to marry due to a desire to protect their pre-marital wealth from the generous financial remedy laws in England and Wales?”. With courts prioritising fairness over asset origin, many individuals seek asset protection strategies to safeguard their wealth before entering marriage.

Pre- and Post-Nuptial Agreements

A key tool for asset protection is a pre- or post-nuptial agreement, depending on whether they are entered into before or after a marriage. While not legally binding in England and Wales, such agreements are highly persuasive in court, and a Judge would need a strong reason to depart from them. Courts will  mostly be persuaded to uphold such agreements, provided they are fair, meaning they do not leave one spouse significantly worse off.

Despite their advantages, many find discussing financial agreements before marriage uncomfortable or unromantic, having said that, there  is growing awareness and acceptance of such  agreements, with couples increasingly viewing them as a practical and preventative step rather than a sign of mistrust within a relationship. Many wish to avoid the potential for an emotionally and financially expensive divorce process and  enter into such agreements to mitigate that risk.

Trust Structures

For those with significant pre-marital wealth, Trust structures offer another layer of protection. Trusts can be particularly useful where there are children or other beneficiaries whom the wealth creator wishes to prioritise over a spouse in the event of divorce.

If a Trust is set up legitimately (that is without the primary purpose being to defeat a spouses claim) and well in advance of any marital breakdown, it can be difficult to challenge in court. On the contrary, there is a presumption in English law that any Trust established within three years of divorce proceedings was intended to defeat a spouse’s claim, with the burden on the settlor to provide evidence to the contrary.

Offshore Assets and Legal Challenges

Some individuals attempt to move assets overseas, believing that this may avoid potential claims in divorce proceedings. However, English courts have extensive powers to address such actions. If assets are placed offshore, the courts may offset those interests against UK-based assets or hold a non-compliant party in contempt of court. The idea that offshore assets are beyond the reach of English law is, in many cases, a misconception.

Understanding Divorce Law and Financial Needs

Many people underestimate how courts assess financial settlements in divorce.

One key principle is that financial needs are measured by reference to the standard of living enjoyed during the marriage. For example, if one spouse introduces the other to a high-end, luxury lifestyle, that standard of living will be a factor in determining financial support post-divorce.

Additionally, full and frank financial disclosure is a legal duty in divorce proceedings. Hiding assets can lead to severe consequences, including adverse inferences, cost orders, and other court-imposed sanctions.

Marital agreements remain the best tool for asset protection and are increasingly upheld —particularly if it can be evidenced that they meet the financial needs of the weaker party. Whilst many may feel it is simpler not to marry, this is not always the answer. Even unmarried partners, particularly those with children, risk financial claims being made against each other.

As a marriage represents a legal contract between two people which brings with it significant financial implications, seeking legal advice before marriage, or even before cohabitation, is a sensible step. Just as one would consult a solicitor before purchasing a property, taking legal advice before making a major life commitment can provide clarity, security, and protection for both parties involved.