Amazon boss Jeff Bezos didn’t have a pre-nuptial agreement – but that doesn’t mean you shouldn’t either
The newspapers have been full of reports that the Amazon boss’s failure to put in place a pre-nuptial agreement is likely to cost him a cool $70bn. This implies that pre-nups are all about money and only the concern of the super-rich. This is not the case. The use of pre-nups is growing, especially among millennials, and for good reason.
Given that many millennials now leave education saddled with huge debts, it is understandable that they may want to ring-fence their liabilities.
The world's richest man, Jeff Bezos, is divorcing his wife of 25 years. The divorce is likely to cost Bezos half his estimated $140bn fortune, making wife MacKenzie the wealthiest woman in the world. Under Washington state law, where they will probably divorce, a couple's assets are treated as 'community property' and divided equally.
The press has been keen to point out that Bezos could have avoided this (assuming he wanted to) by entering into a pre-nup (or post-nup after they got married). "Jeff Bezos does NOT have a pre-nup and will have to split his $140bn fortune," screamed the headline in the Daily Mail.
This focus on how much of his fortune he could have kept for himself – although presumably losing the odd billion here or there won't affect his day-to-day life too much – once again misses the point about pre-nups. They are not just about protecting wealth.
Rise of pre-nups among millennials
This message is starting to be understood, at least in the US (and where the US leads, we often follow). A survey by the American Academy of Matrimonial Lawyers found that 62% of respondents have seen an increase in the number of clients seeking pre-nups. And, 51% said they had noticed a rise on demand for pre-nups from millennials.
One of the reasons for this is believed to be that some millennials are more worried about debt than wealth. Bear in mind that all a couple's assets and liabilities are taken into account on divorce. Given that many people now leave education saddled with huge debts, it is understandable that they may want to ring-fence their liabilities.
On the flip side, many millennials marry later in life and have greater assets to protect by the time they wed. In some cases, the pre-nups are less about finances and they simply want to set out formally their child care responsibilities should they have children.
Other reasons for entering into a pre-nup include (but are not limited to) protecting assets for children of a previous marriage, ensuring you keep control of a business you own, protecting a future inheritance, or a desire to keep hold of assets that are hard to divide such as an art collection.
One explanation for the rise in pre-nups among millennials is a change in social dynamics. Many millennials are children of divorce and more aware of the need to protect their interests. Plus, in the age of dating apps they may have less of a romantic commitment to marriage than older generations.
Enforceability of re-nups in the UK
Unfortunately, pre-nups are not yet legally enforceable in the UK. Having said that, they do carry "decisive" or "compelling" weight before the courts provided the required formalities are complied with. These are:
- Both the husband and wife must receive independent legal advice.
- The agreement must be entered into no less than 21 days before the wedding.
- Neither party must have been put under pressure/duress to sign.
- Both parties must have made full and frank disclosure of their assets.
- The agreement has to be fair and realistic.
This requirement for the agreement to be fair and realistic was highlighted in a recent Court of Appeal decision where a wife was awarded half her husband's £11.4m fortune despite signing three pre-nups. You can read more about this case here.
It is only a matter of time before pre- and post-nups are legally enforceable. This has already been recommended by the Law Commission but not yet been taken on board by the government (where parliamentary time has been consumed by Brexit).
In the meantime, it is certainly worth couples putting a pre- or post-nup in place and using a solicitor to do so to ensure the formalities are complied with.
If you would like advice in relation to a pre- or post-nuptial agreement, or financial arrangements on divorce, please contact Mark Goldstein now at [email protected] or on 020 7616 5322.