Divorce can look very different for different people. For some it is receiving a $20 million settlement under the terms of a prenup.
The quote below is particularly interesting. Ellen Barkin is an American actress and Ron Perelman is an American banker. According to Good Housekeeping (not my usual source of divorce information) under the terms of their prenup Ellen would receive $20 million if they stayed together for at least 5 years. And reportedly they separated after 5 years. I’m not casting aspersions, but you can see the potential problem with these sorts of clauses.
Whether to include a clause like this is a common question when we are preparing prenups in the UK. Here is why.
1) Prenups are not legally binding in the UK. But, they are more likely to be upheld by a Court if certain conditions are met.
2) One of those conditions is that the prenup needs to be fair. What is fair depends on circumstances, including the length of the marriage. So, the longer the marriage, the more the financially ‘weaker’ person might expect to receive in a divorce settlement.
3) So to try to ensure that the prenup has the best chance of being upheld, you could include provision for the financially ‘weaker’ person to receive more the longer the marriage lasts.
4) Most people find these clauses distasteful. It could be an incentive for someone to stay in a marriage when they otherwise might not. This is particularly concerning for the person who would be paying a higher sum under a settlement if the marriage were to last longer.
These sorts of clauses are always considered as an option when preparing a prenup, to help ensure that a prenup is considered fair. In my experience, most people decide that they don’t want to include such a clause. Other options might be to include higher financial provision from the beginning that could cover a longer period of marriage (on the basis that people believe and hope that their marriage will last for a long time), or to rely on a review clause which should always be included in any event, at say a 5 year point or when there is a big change in circumstance.
These sorts of things depend on what people are trying to achieve with the prenup. For example, some people just want to protect a particular family business asset or inheritance, while others want to protect assets which they have built up alone before the marriage.
If you need any advice on prenups please don’t hesitate to give us a call.
Ellen Barkin and Ron Perelman: $20 Million
The actress and the Revlon executive were married for five years when he filed for divorce in 2006 from her, his fourth wife. Their prenuptial agreement granted her $20 million if they stayed together at least five years.
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