Member Article

Entrepreneurs protecting businesses behind surge in ‘prenups’

Businessmen and women keen to insulate their companies from the impact of a possible divorce are fuelling a surge in prenuptial agreements, according to Manchester-based law firm JMW.

One of the country’s leading family law firms, JMW has reported a trebling in the number of ‘prenups’ entered into by its clients in the last three years.

The firm said that almost 60 per cent of all pre-marital contracts taken out during that period had been sought by entrepreneurs trying to protect their businesses.

Partner Catherine Jones suggested that even though the agreements still lacked the full force of law, a Supreme Court ruling giving them greater weight in determining how marital assets might be divided on divorce had been critical in spurring greater adoption.

She added that whilst the vast majority of clients demanding prenups were male, there had been a noticeable rise in the proportion of businesswomen taking such steps to avoid prospective husbands claiming a share of their start-ups if their marriages ended.

“We are not merely seeing those individuals who have had long business careers and are considering marriage or, in fact, those people who might have already been through a painful and costly divorce and could be justified in thinking ‘once bitten, twice shy’.

“Many of the individuals with whom we’re dealing are people who expect to make money at some point in the future and want to avoid the prospect of losing a chunk of their company’s worth in a divorce settlement, with all the implications for business stability which that might bring.

“It marks a very definite shift in attitudes to prenups since the Supreme Court ruled in favor of Katrin Radmacher.

“The fact that the judgement made them more enforceable means that entrepreneurs have come to regard them as being just as important as other contracts for business planning purposes, regardless of the current size of their organisations.”

In October 2010, the Supreme Court dismissed attempts by Nicholas Granatino, the former husband of a German heiress, Katrin Radmacher, to set aside a prenup which they had signed before their nine-year marriage.

Her victory meant that he received just under £1 million, a far smaller sum than he had originally claimed.

Ms Jones said that she and her colleagues had drawn up prenups on behalf of individuals working in a diverse range of business sectors.

She revealed that although 85 per cent of enquiries came from businessmen, the number of women insisting on prenups had gradually risen over the last three years.

That development coincides with figures released by the Office for National Statistics showing that the number of self-employed women increased by 9.6 per cent in the two years to September last year, compared with 3.3 per cent for men over the same period.

Ms Jones said her firm’s caseload suggested that the Radmacher ruling had “democratised” prenups.

“Whereas the value of a prenup has long been appreciated by those with wealth, individuals of more modest means now recognise the part they can play in reducing the dispute and uncertainty which, sadly, is a feature of some divorces.

“Those are two things which businesses looking to grow can ill afford. As the entrepreneurial spirit continues to accelerate, we have no reason to doubt that more businessmen and women will follow suit and have prenups of their own.”

This was posted in Bdaily's Members' News section by Simon Malia .