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Saturday 21 April 2018

Advice: Fairness has to be the essence of pre-nuptial agreements

Many people in rural Ireland hold the fear of the family farm being lost
Many people in rural Ireland hold the fear of the family farm being lost

Theresa Murphy

Q I have recently got engaged and my fiancé and I are considering signing a pre-nuptial agreement. My parents have transferred the family farm to me and I have made a will regarding my property but I am concerned about the consequences of signing and pre-nuptial agreement and what effect it might have. Would my will be affected by signing the pre-nuptial agreement and can I still choose who to leave the farm to in my will?

A It is always prudent to plan for all eventualities when getting married. Many people in rural Ireland hold the fear of the family farm being lost out of the family as a result of marital breakdown. In fact it is very unusual for a Court to direct that the family farm be sold to provide for a spouse in the case of separation or divorce.

This view was borne out by a Macra na Feirme survey on 'Land Mobility and Succession in Ireland' which identified that keeping the farm within the family is a concern for those handing on the farm to the next generation.

Pre-nuptial agreements, although not binding on a Judge in the case of a separation or divorce, can have very persuasive effect in judgements, particularly in the case of a marriage breaking up after a relatively short period.

The essence of a good pre-nuptial agreement is fairness to both spouses in the agreed terms.

You should aim to ensure that proper provision is made for both spouses in the case of separation bearing in mind the assets and liabilities of the partner.

The nature of a pre-nuptial agreement is that is provides some level of predictability for a couple as to how their assets will be dealt with on divorce. It is an agreement between two future spouses in contemplation of being married to each other.

Ending a Co-habitation

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For the thousands of couples who live together either before or instead of marriage or civil partnership you should also bear in mind that if you become a qualified co-habitee there are consequences upon the ceasing of the co-habitation very similar to marriage.

You are defined as a qualified co-habitee if you live with someone for a period of two years, if you have a child together (or a period of five years if you do not).

However, you can enter into an agreement with your co-habitee similar to a pre-nuptial agreement, whereby one co-habitee can agree not to seek redress including any portion of a particular asset, eg, the farm, when the co-habitation ends.

This agreement will be binding on a Judge in this case - this is the main difference to a pre-nuptial agreement.

Pre-Nuptial Agreements and Death of a Spouse

In the instance of one spouse dying, the many difficulties and stresses associated with dealing the deceased person's estate come to the fore very quickly, particularly in the case of a family farm where stock have to be cared for, bills paid etc.

The existence of a will is the greatest source of guidance.

If a spouse who owns the farm dies without a will then (as in the case of all other persons who die without a will) the rules of intestacy apply.

This means that the surviving spouse will be entitled to inherit two thirds of the estate and any children, the other third (or in the absence of any children, the entire estate).

It is not relevant whether that couple entered a pre-nuptial agreement or not in the case of a death unless the pre-nuptial agreement specifically deals with the possibility of the death of one of the spouses.

The purpose of a pre-nuptial agreement is really to provide for the separation and/or divorce of the couple rather than the death of one of the spouses.

This may not be the outcome that the deceased person intended, for instance if they intended to leave the farm to a person other than their spouse, eg a nephew or niece.

If you wish to plan for what will happen in the case of the death of a spouse you can provide for this in a pre-nuptial agreement however you should bear in mind that fairness must prevail towards the spouse.

Although the pre-nuptial agreement is entered, in many cases, because of concerns of parents of the prospective spouses, the agreement is between the spouses themselves. The parents are not part of that agreement and would likely have no entitlement to see the agreement or its contents in many cases.

Making a Will pre-and-post marriage

It is a major issue often not considered by those who have made a will that if the will was made before the testator (the person making the will) gets married and is not made 'in contemplation of the marriage' then the will is revoked as a result of the marriage.

If that person were to die after getting married without having made a new will after the date that they got married then they would effectively die intestate and the rules of intestacy would apply.

This may not give effect to the deceased person's wishes.

It is advisable to review your will after getting married to ensure that it reflects the change in your circumstances and to ensure that the will is valid upon your death.

Having entered a pre-nuptial agreement does not really have any bearing on how you leave assets in your will.

The article is intended as a general guide only and you should seek professional advice on your individual circumstances.

Theresa Murphy is a barrister based in Ardrahan, Co. Galway. email: theresamurphy@lawlibrary.ie


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