The Perils and Pitfalls of Marriage the second time around…
If you succumb to the triumph of hope over experience and decide to marry for the second (or more) time, don’t let your rose tinted spectacles affect your better judgement. Take advice on how to protect your hard earned assets (or those hard won in the first divorce!)
Forget extreme sports - one of the most dangerous things you can do in life is to remarry, particularly if you have assets and your new love is less well off.
Why? About two fifths of all marriages taking place in the UK are remarriages for both or one partner. The average age of first marriage is 36 and 34 for men and women respectively. Consequently the average age at first divorce is also rising (43 for men and 41 for women). Many people have accumulated assets such as a house and a pension fund. If they divorce and transfer assets to their former spouse, they may have just enough time to rebuild their wealth before retirement. A second divorce can be devastating.
Divorce rates are higher for second marriages, at over 60 per cent. Over a third of second marriages end within 5 years and statistics show divorces increase amongst older people - one in eight divorces occurs when the man is in his fifties. Second marriages can be complicated, involving; children from previous relationships, existing maintenance; pre-owned assets.
What can you do
English law does not exclude property owned before a marriage when dividing assets on divorce; anything you own may be 'redistributed' when the marriage ends. The best way to avoid this is not to marry! However, even this may not protect you as the government is considering the legal position of cohabitees and plans to publish a consultation paper in 2008.
A pre-nuptial agreement
Those contemplating remarriage, particularly where there are assets or children from a former relationship, would be wise to consider an agreement. Although you cannot put blind faith in a pre-nuptial agreement, which is presently only persuasive for a court and not binding, it does, if properly drafted, provide a useful record of the intentions of the parties at the outset of their marriage, and a detailed record of their assets at the time. If you do remarry, you have to accept your assets will be up for grabs – but you can make it more difficult. In the pre-nup, you can record agreements as to who owns what, and set expectations. If the relationship breaks down quickly, and/or there are no children, you are much more likely to limit claims to what you had originally agreed. Bear in mind a court will require a pre-nup to have been signed at least 21 days before marriage, to avoid any suggestion of duress, amongst other requirements.
Keep your assets separate
Assets are now commonly referred to as “matrimonial” or “non-matrimonial” – the former being firmly within the courts’ grasp, and the latter being more likely to be put on one side - if there are enough other assets to satisfy the other party’s claim on a needs basis. That might cover an inheritance received during your second marriage for example, or a business built up before marriage.
The courts can redistribute property on divorce, but you have a better chance of retaining property and money brought into the marriage if it is kept separate from joint assets. Separate bank accounts give financial independence, but may also help to counter arguments later, for example over trust income received. If it is not going into a joint account it is harder to claim it was a financial resource of the marriage and more difficult to attack. This can help to defend a claim against a pre-existing family trust, for example. Of course, you should not be drawn into doing things for “tax reasons” such as putting shares into your spouses name – that may well come back to haunt you later, when the shares are retained by your partner on divorce, or you can only recover them by paying full market value.
Make a Will
Most people want to preserve and protect their assets for their own children. Various steps can be taken to do this. Make a new will, as remarriage invalidates an existing will. This might have the effect of disinheriting your children – not what you want. You should always keep your will up to date. Try to hold newly acquired property as Tenants in Common, as opposed to Joint tenants. This means you can dispose of your interest through your will.
Pensions
Your pension may have already suffered a pension sharing order and be worth somewhat less than it was. On a further divorce, you cannot avoid the possibility of another pension sharing order. On practical level, you should remember to change the nominations to the Trustees for the death benefits, if you have not already done so.
Children
Other peoples’ children are sometimes challenging! Avoid arguments by agreeing in advance some important basics such as who will discipline them, and discuss your expectations of behavioural standards and style of discipline, before you get married.
The future
Don’t let the potential problems put you off – you might be one of the lucky ones who live happily ever after, and your divorce lawyer will be grateful to you for trying!
For further advice contact:
Caroline Dresden, Associate, Mills Reeve, 78-84 Colmore Row, Birmingham, B3 2AB or Caroline.dresden@mills-reeve.com
