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Businesses urging key executives to sign pre-nups

25/08/2011

Businesses urging key executives to sign pre-nups

Family lawyers are noticing a growing trend for businesses to ask key executives to sign pre-nups before marrying.

The aim is to protect the company against the disruption that could be caused if equity partners or directors are forced to sell their shares to fund a future divorce settlement.

The move may appear as an intrusion into a person’s personal affairs, but it does make sense from a business point of view.  

Companies don’t want to find that a director suddenly has to sell their interest in the business because it could be very damaging and destabilising – especially in difficult trading conditions likethose we’re experiencing now.

Some company owners are also asking their children to draw up pre-nups. This is seen as a way of protecting family interests many years down the line after the children have inherited the business.

The increased interest in pre-nups follows a landmark ruling in the Supreme Court in October involving Katrin Radmacher, who is the heiress to a multi-million pound family business. The court upheld a pre-nup agreement which limited the amount of money she had to give her former husband.

The ruling established that pre-nups are enforceable in the UK as long as they are properly drawn up and fair to both sides.

Please contact our family law team if you would like more information about the issues raised in this article.