Protecting assets on marriage?

[ThePartyArtist]

In September I am marrying my partner of 9 years. We don't have children or own our own home but plan to in the future. I have significant savings (£125K) and earn more than him by about £10K. He does not have savings. In the future our earning difference may change e.g. if I am on maternity.

We have both been wondering whether to do any of the following, and I wondered if people could advise please:

1. A DIY pre-nuptial agreement, bought off the internet (£25) in which we agree that if we divorce my savings / the equivalent amount put into buying the house, remain mine.

2. A Pre-nuptial agreement done by a lawyer (£700 + VAT!) in which we agree the above.

3. No pre-nup but the savings remain in my name (as they are now) until we use them to buy our first house. At that point we buy as 'Tenants in Common' meaning we decide the ratio to which we each own the house. If we divorce the asset is split accordingly to that ratio.

4. No pre-nup, buy house as 'Joint Tenants' i.e. we own 50% of it each, and it would be split accordingly if we divorced.

To give a bit more info... a pre-nuptial agreement is not legally binding so I'm not sure it's worth doing at all, particularly the £700 option. The savings will remain in my name until they're put into buying a house, but that's likely to happen fairly soon. If we buy as 'tenants in common' I'm not sure what split we'd agree; he'd have next to nothing to put into buying the house (that would come from my savings) BUT it seems unfair for it to be in his name as he'd pay 50% of the mortgage, so what ratio split would be fair?

Obviously i hope it never comes to it but want to be covered just incase.

Don't get married? Seriously, you can put all the safeguards you like in place, but the best way to retain financial independence is to stay as a cohabiting rather than married couple. If you buy a house you can set yourself up as co-owners, have your relative contributions documented, and it will never become a marital asset. You can take out insurance and make wills in each other's favour etc.

My husband and I bought our current house together before we were married. He had £50k to put towards it which had been an inheritance. I had £10k which was proceeds from selling my first house. We bought as Tenants-in-Common for two big reasons.

Firstly, thinking positively, if we had a long and happy marriage then it would be more efficient for Inheritance Tax planning to be TiC and not Joint Owners. Secondly, in the event that we did ever split up, we agreed that it would only be fair that of whatever equity was in the house, firstly we would take out our original contribution uplifted by RPI (we agreed on this as a reasonable rate of interest to use), and then split the remainder 50:50 to reflect that we had both contributed to mortgage payments.

Our solicitor commented that it would involve "hellish complicated calculations" but frankly that doesn't matter, they're not impossible. What matters is that it was the fairest solution we could come up with.

@Cogito thanks, I can see you talk a lot of sense, but we are planning to get married in 2 months.

@Sunseed ''firstly we would take out our original contribution uplifted by RPI (we agreed on this as a reasonable rate of interest to use) and then split the remainder 50:50 to reflect that we had both contributed to mortgage payments.'' Can you explain this a bit more please, sorry didn't quite follow. It sounds a good system (if you are having an amicable split!) and I must admit I hadn't thought about the inheritance tax complication...

Yes. He put in £50k, I put in £10k and we had joint mortgage of £90k to buy £150k house. We were each basically lending money to a house-buying project and agreed that it would only be fair to reward this lending with some interest. We could have chosen any level of interest - a flat rate of 3% for example. We chose to use RPI (Retail Prices Index) because it would give us a reasonable reflection of the economy over time, both ups and downs. In the event of negative equity we would also use RPI to reduce our shares.

So say that we split today and the house is now worth £400k. After repaying the £90 mortgage that leaves £310k of equity. Let's say that the effect of RPI over the last 12 years has been to uplift our shares by 20%. He is therefore entitled to £60k and my share is now £12k. The remaining £238k is to be split equally because we have both contributed to the mortgage/household expenses and had the benefit of living in the house. His total share is £179k and mine is £131k.

The IHT bit is relevant because we can each leave our share to whoever we want to as per our Wills, and use this mechanism to plan to minimise our potential IHT liabilities.

Gosh, we just go on what's mine us yours. I dont think its naive to do that but I have great confidence in our marriage and his character should something crazy happen to our relationship. He came into our marriage with significant investments. I am now buying and getting a mortgage for our family home due to current financial situation with him. I see all of it as our family finances and would split them equally if we were to split.

Arrange for your solicitor to draw up a Deed of Trust when you buy a property. They are very simple to do, and are cheap. It is basically a legally binding document stating the different proportions of equity that you and your partner have in a property. My ex-husband and I had one drawn up when we married and bought a house together, and it was the best thing I ever initiated (we subsequently divorced) :( It protected my financial future (I had a much larger stake in the house than he did).

Link explaining Deeds of Trust below:

www.findlaw.co.uk/law/property/buying_property/500297.html