By Thea Dunne – Journalist at Vardags law firm
Prenups, in the popular imagination, are something belonging to the realm of celebrity; associated with movie stars, or wealthy Americans.
What people often don’t realise is that prenups, under different names, are standard practice elsewhere in Europe and have been legally enforceable in the UK since 2010.
Prenuptial agreements are contracts entered into prior to getting married. A well-known means of protecting businesses and family inheritance, their main purpose is in laying out the division of assets should the couple divorce. Without one, all control over who owns what in the event of a split is forfeited to a Family Court judge.
In the past, courts in England and Wales wouldn’t afford prenuptial agreements weight in financial proceedings following a divorce. However, that all changed with the landmark Supreme Court case of Radmacher v Granatino in 2010. Ayesha Vardag representing German heiress Katrin Radmacher convinced the Supreme Court to uphold her client’s prenuptial agreement, as it would have been in the couple’s native France and Germany.
For the first time, prenuptial agreements were given decisive weight in determining financial division on divorce. Ayesha Vardag, who has since been hailed as Britian’s top divorce lawyer, praised the Supreme Court’s “thoroughly modern ruling”, which gave “due respect” for adult autonomy and allowed English law to “catch up with the rest of the world”. Since then fair agreements can be enforced.
To be a fair agreement, the couple would have both have to have been honest about their finances, and the agreement would have to ensure they both would have realistic and sufficient provision to continue to live on in the aftermath of a breakup. There are also a number of further safeguards the courts put in place: both parties need independent legal advice, and there can be no indication of duress. Full and frank financial disclosure of both parties’ assets has to be made ahead of time, and the agreement should be reviewed or amended over the course of the marriage with any significant change in personal circumstances such as health, or children.
The threshold for a fair agreement gives vastly more autonomy to the parties making the agreement, than the unpredictable, but likely equal, split of resources, should the division be down to judicial discretion.
Why get one?
As couples are more likely to remarry or marry later in life, it is more common for individuals to have built up wealth individually before tying the knot. Particularly in cases where people have children from previous marriages, businesses and inherited property to protect, they may not feel able to get married without any future-proofing in place.
The prenuptial agreement will be written up to protect the considerable wealth that a party brings into the marriage whilst still being fair to the other partner. Similarly, a prenuptial agreement can be used to protect finances where one party has a significant amount of debt. Their partner might be reassured that should the marriage end the debt would not be theirs to take on.
Prenuptial agreements are also an effective way of protecting businesses that the parties bring into the marriage. This can be particularly important where the business is a family business or involves multiple people. Britain’s top divorce lawyer Ayesha Vardag told BBC News that she expects to see a rise in sophisticated clauses in prenuptial agreements for the benefit of companies. “For some companies like hedge funds, their assets are quite heavily held by individuals,” she said. “They might require a pre-nuptial agreement from any employees to whom they issue stock to prevent it being depleted”.
Prenuptial agreements can go beyond financial organisation however. In high profile marriages, it is not uncommon for there to be privacy clauses in the contract. Vardag included a social media clause in her own prenuptial agreement, specifying that if the marriage were to end, both parties would be obliged to seek out the other’s permission before posting any confidential information or photos concerning them. “I think it’s incredibly helpful to [have this clause in a prenup] because it enables you to be more trusting,” she explained.
There are alternatives. While prenuptial agreements need to have been entered into no less than 21 days before the marriage, couples who are already married can enter into a postnuptial agreement at any point. That said, the likelihood of them being upheld may well decline as a result, particularly if a judge senses a postnup was insisted upon on one side when it looked as though the marriage was in decline rather than in good faith.
Unmarried couples, obviously can’t get prenups but can, and should, seek cohabitation agreements. While a married couple can seek recourse in the courts if it falls apart, cohabitees have no legal protection as a long-term partner. For them in the event of a break-up such an agreement might be the them thing standing between them and financial ruin.
Prenups have none of the cultural ubiquity in the UK as they have in the US. While more common than most would think, the culture around them is more discreet. Public perception is mixed. Often slammed as ‘unromantic’, they were long disregarded by the courts on a public policy basis. The law, it was believed, needed to lend moral and physical force to the sanctity of marriage. The law was hazy on them. Prenups weren’t in a checklist of factors listed in the the Matrimonial Causes Act 1973, so their relevance was always up for judicial interpretation. It was a matter of legal precedent, rather than statute. However, the case-law began to indicate that the public policy principle was outdated. With Radmacher, private autonomy prevailed.
None would deny that prenuptial agreements are valuable to safeguard businesses and family inheritance. But many commentators have pointed out that that is part and parcel of marriage: a public status and legal contract. Others argue there is no reason why that contract shouldn’t be negotiable, particularly as society changes and people’s live change.
The main criticism levelled at prenups is the admission that something might go wrong. Marriage without one is a vote of confidence. Is it realism, or cynicism?
Divorce lawyer Catherine Thomas disagrees. She told The Metro that the conversations that ensue as a result of prenuptial agreements are “very healthy”, because they facilitate couples discussing future plans and expectations, and protects individual autonomy within a marriage. Whether or not you are convinced by the back-up plan at the beginning of a marriage, if things turn South the tide turning in favour of prenups might well help avoid painful and lengthy litigation at the end.
The Radmacher ruling showed that the law is adapting to modern values and relationships. Prenups offer the individual the autonomy from the courts and the state that the public has been demanding. With them we will see, more and more, people marrying and separating on their own terms.
Chinese fintech platforms expected to meet capital requirements within two years – regulator
BEIJING (Reuters) – China’s financial technology companies are expected to meet capital adequacy requirements within a maximum of two years, said Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC) on Tuesday.
Micro lenders, consumer finance firms and banks operated by internet platforms should all have adequate capital like other financial institutions, Guo said at a news conference.
Chinese financial regulators have rolled out a slew of measures since last year to tighten the oversight of online lending practices in the country, particularly of technology firms looking to expand into the financial space, moving away from its once laissez-faire approach.
The drive scuppered Ant Group’s $37 billion initial public offering last year and has seen Alibaba’s fintech affiliate formulate plans to shift to a financial holding company structure.
“Starting a business needs capital, so does starting a financial business,” Guo said.
“As long as internet platforms conduct financial operations, the requirement of capital adequacy ratio on them should be the same as financial institutions.”
Financial regulators have set various grace periods for different internet platforms, according to Guo. Some have until the end of 2020 and others until the middle of 2021 to meet capital adequacy requirements, he said.
“But by a maximum of two years, (the capital adequacy of) all platforms should be back on track,” Guo added.
With regards to Ant Group’s restructuring, Guo said there were no restrictions on the financial business it develops but that all of its financial activities should to be regulated by laws.
Ant Group is in talks with other shareholders in its new consumer finance unit to bolster the firm’s capital as the fintech giant prepares to fold in its lucrative micro-lending businesses, Reuters reported last week.
It would need an additional capital of 30 billion yuan ($4.64 billion) to meet regulatory requirements, according to the report.
($1 = 6.4714 Chinese yuan)
(Reporting by Tina Qiao, Cheng Leng and Ryan Woo in Beijing; Se Young Lee in Washington; Editing by Christian Schmollinger and Ana Nicolaci da Costa)
Oil rises as vaccine and U.S. stimulus boost demand outlook
By Laila Kearney
NEW YORK (Reuters) – Oil prices were up on Monday on rising optimism about COVID-19 vaccinations, a U.S. economic stimulus package and growing factory activity in Europe despite coronavirus restrictions.
Signs that Chinese oil demand is slowing kept prices from moving higher.
Brent crude rose 51 cents, or 0.8%, at $64.93 a barrel by 11:29 a.m. EST (1629 GMT), and U.S. West Texas Intermediate (WTI) crude gained 28 cents, or 0.5%, to $61.78 a barrel.
Both contracts finished February 18% higher.
“The three major supportive factors are the prevalent vaccine rollouts, the optimism about economic growth and the view that the oil balance will get tighter as a result of the first two points,” PVM Oil Associates analyst Tamas Varga said.
Support also came from a $1.9 trillion coronavirus-related relief package passed by the U.S. House of Representatives on Saturday.
If approved by the Senate, the stimulus package would pay for vaccines and medical supplies, and send a new round of emergency financial aid to households and small businesses, which will have a direct impact on energy demand.
The approval of Johnson & Johnson’s COVID-19 shot also buoyed the economic outlook.
Manufacturing data from around the world was mixed.
China’s factory activity growth slipped to a nine-month low in February, sounding alarms over Chinese crude buying and pressuring oil prices.
“One negative is more and more talk about Chinese oil demand maybe faltering, that they bought all the oil that they’re going to need for a while,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “There’s some talk that their strategic reserves are filled up and so some people are betting against the Chinese continuing to drive oil prices.”
German activity, on the other hand, hit its highest level in more than three years and Euro zone factory activity raced along, driven by rising demand.
OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to agreed reductions under a pact with allies, a Reuters survey found, ending a run of seven consecutive monthly increases.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, meet on Thursday and could discuss allowing as much as 1.5 million barrels per day of crude back into the market.
(Additional reporting by Bozorgmehr Sharafedin in London, Jessica Jaganathan and Florence Tan in Singapore; Editing by Jason Neely, Edmund Blair, Barbara Lewis, David Evans and Will Dunham)
EU auditors warn over 5 billion euro emergency Brexit spending
BRUSSELS (Reuters) – The European Union lacks tight oversight of 5 billion euros in emergency Brexit aid, the bloc’s auditors said on Monday, warning over governance risks regarding quick cash injections as Brussels prepares to disburse massive amounts of COVID-19-related stimulus.
The European Court of Auditors (ECA) said member states are due to get 4 billion euros, or most of the funding from the so-called Brexit Adjustment Reserve this year, without the usual requirement to agree with the bloc’s executive in advance what exactly they plan to spend it on.
“We therefore raise concerns that this proposed timing and structure creates a lack of certainty where member states may choose suboptimal or ineligible measures,” said Tony Murphy, a member of the ECA, an agency set up to ensure EU funds are spent properly.
Murphy said EU countries would only report on their completed spending in September 2023 and would need to pay back money that would not be deemed eligible.
“We would like to see changes,” to improve financial management and ensure the overall effectiveness of the Brexit emergency fund, Murphy said, though he said the ECA realised those most affected by Brexit needed the money swiftly.
Based on the size of trade ties with now-departed Britain and the share of fish catch in UK waters, Ireland is due to get a quarter of the Brexit emergency allocation, followed by the Netherlands, Germany and France.
As the EU moved from a protracted Brexit crisis to grappling with the coronavirus pandemic, last year it designed another unprecedented spending plan – economic stimulus worth 750 billion euros to pull member states out of a record recession.
While EU countries need to pre-agree with the Brussels-based European Commission their spending plans to receive recovery money, Murphy said trade-offs between swift and diligent spending were on the auditors’ minds.
“What we’d be striving at is a good balance between flexibility and appropriate control structures,” he said. “They are emergency measures, we can’t wait around for years for the plans to be drafted. It’s a matter of getting the balance right.”
(Reporting by Gabriela Baczynska; Editing by Hugh Lawson)
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