For richer or poorer ... and in writing

As unromantic as it sounds, a financial arrangement between couples before marriage is becoming more imperative as the divorce rate rises. Lawyers advise on the right steps to take – and the implications.

For Money Lead - July 27, 2013
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John Martin St Valery, a Dubai-based company director, has been married to his wife Carolynn for 24 years. When they tied the knot, Carolynn had sufficient savings for a mortgage deposit, while her husband-to-be did not. His father-in-law, after hearing the couple were going to consolidate their assets and buy a property together, suggested they draw up an ownership agreement for a joint house purchase before marriage to protect the deposit as well as his son-in-law's monthly mortgage payments.

"That's what we did and I felt very comfortable doing so," explains Mr Martin St Valery. "We wouldn't have been able to afford our first family home in London without my wife's deposit and my earnings to service a loan facility."

While an ownership agreement is different from a pre-nuptial agreement, it is an example of the arrangements some couples make to protect themselves against the financial repercussions of divorce.

As unromantic as a pre-nup may sound, the reality is that many marriages fail, which makes the need to plan for what may happen in the event of a split more imperative.

Data from the Dubai Statistics Centre shows that divorce is on the rise - the number increased by 10 per cent between 2009 and 2010, and 13 per cent between 2010 and 2011. For expatriate couples, there was a 31 per cent jump in divorces last year.

The statistics, coupled with the fact that couples are getting married older - with established careers and personal wealth to safeguard - mean increasing numbers are drawing up pre-nups before heading down the aisle.

"We have had a 30 per cent increase in inquiries from April 2012 to April 2013, including for pre-nups," says Alexandra Tribe, a family law solicitor at Expatriate Law in Dubai. She cites a 2010 case in the United Kingdom's Supreme Court when a German heiress won her case to enforce her pre-nup, limiting her former husband from gaining access to her wealth as being a cause in the rise in demand.

"It seems that since the [Katrin] Radmacher case in the UK, there is more clarity under English law about the enforceability of pre-nups and that is likely to have made the idea more popular. People are more certain now that their pre-nup [under English law] would be enforced than before so that will have no doubt caused some of the increase," Mrs Tribe adds.

While many do not like the idea of a formal contract, Mr Martin St Valery, the chief executive and founding partner of the Links Group of Companies, says couples should approach marriage in the same way they approach a business deal.

This month his 23-year-old daughter Chloe, who attended secondary school in Dubai, tied the knot in London. "They do not have a pre-nup but certainly worked hard to form a contractual arrangement between each other when they purchased their first home together," says Mr Martin St Valery. His daughter runs a beauty therapy business in the UK.

While he says he believes marriage is a commitment for life, he insists there's no reason to abandon all sense when tying the knot. "Situations change. Intentions change. Why not pre-plan, not to expect change but to cater for the agreed unknown. Again, a bit like insurance - if you have it, you don't typically need it," he adds.

So, what are the right steps to take to put a pre-nup in place?

The first thing to bear in mind is that the procedure can be lengthy and complicated. According to Ms Tribe, key considerations for expats are nationality, legal jurisdiction and in which countries assets are held.

Even more importantly, when a couple plans a pre-nup, they are asked where they are likely to be living in the case of a divorce.

"Say I was advising an English couple living in the UAE, and they were likely to return to live in England and had all their assets there, we wouldn't want to draft a prenuptial agreement under UAE law only," explains Ms Tribe. "You would alternatively or additionally draft it under English law so that it has the best chance of being enforced."

The situation obviously becomes more complicated if the couple have different nationalities, or hold assets in different countries. If they do, she says, careful legal advice must be sought from lawyers in those countries in which the parties have a connection, to not only determine the potential jurisdictions for a divorce, but also whether a pre-nuptial agreement would be binding in those countries and under what terms.

However, Mary Barton,a solicitor and family law specialist at James Berry & Associates, says that most pre-nups are likely be recognised in the UAE.

"Islamic marriage is based on contract. Non-Muslim expatriate marriage certificates are in fact viewed as 'marriage contracts' by the UAE courts: they are just silent on matters normally addressed in Islamic marriage contracts. A pre-nuptial agreement is a contract if properly drawn up and supplements the marriage certificate. As such, one would normally expect the UAE courts to recognise them and the provision they make for finances on divorce."

Anyone who owns a business or property, is expecting a sizeable future inheritance, earns more than their partner, or has children from previous relationships should consider having an agreement drawn up, says Ms Tribe.

She also recommends that those considering marrying in the Emirates, who believe they will be covered by UAE law, to consider seeking legal advice. If they later separated in the UAE, a husband and wife would retain any assets they have in their own names. However, there are cases where either party may decide to file for a divorce in another country, which is not a factor many are aware of, says Ms Tribe.

"There have been cases where let's say the husband is Egyptian, and he has assumed that because he married his English wife here that she won't be able to file for a divorce in England. So he only worries about what holds here and seeks local legal advice on what will happen in the event of a divorce in the UAE."

However, the English wife could file for divorce in her country of origin. "She can file for a divorce in the English courts even if she's here in Dubai, and many husbands who haven't had advice from an English lawyer wouldn't know that," Ms Tribe adds.

Anyone wanting a pre-nup should also consider the cost involved. While each agreement is individually drafted for each couple's needs, Ms Barton estimates the process could take between two to six hours, at a cost ranging from Dh6,000 to Dh10,000.