Pre-nuptial agreements and debts…

A recent example of why pre-nuptial agreements can be so important to have relates to a woman who entered into a relationship with mostly assets and little debt. Her partner entered into the relationship with mostly debt and little assets. This trend continued throughout the relationship, which lasted 5 years.

When the relationship ended, the woman found out that not only were half of the value of her accumulated assets owed to her now ex-partner, but half of her partner’s debts had become relationship debt. Had the woman had a pre-nuptial agreement in place, this could have been avoided, or at least minimised.

Traditionally, the most common reason people enter into pre-nuptial agreements has been to protect the assets they have acquired individually before a relationship began. However, it is just as important to consider entering into “pre-nups” when your partner has come into the relationship with a considerable debt.

When relationship property is divided, it is not only assets that get divided, but also debts. If debts are accrued by one party during a relationship or if a pre-relationship separate debt becomes relationship debt, this can mean debts will be divided when the relationship ends. It is important to consider protecting yourself from debts you do not accrue during and/or for the benefit of the relationship, if separation occurs.

Sometimes even if you and your partner do not have significant assets, but if one party has significant debt, then it can be a good idea to look at options to protect yourself from separate debts becoming relationship debts.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.