Consider this before getting married

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0:49Let me tell you what happens when you get divorced and you don't plan. Your average divorce probably costs between$20 ,000 and$40 ,000. Family lawyer Ursula Danahar has over 30 years experience helping clients protect their wealth and their future. What's going to happen if, sadly, the relationship goes wrong? How are you going to approach it? That key important issue of pensions. And I think prenups are essential, and they're essential for people who have normal lives. Did you hear that, Will? William at the back of my business partner, he's married. You've got a post-not made.

1:26As a divorce, would you call yourself a divorce solicitor or divorce attorney? Divorced lawyer. Divorced lawyer. You probably really only deal with the bad end of the relationship. Not many people are going to come in and go, our relationship's great, just to let you know. No, which is why one of my kind of go-to topics is pre-nups and post-nups because it's a kind of constructive approach to relationships and organisation and personal finance, which I think is really important. Unfortunately, divorce tends to happen when people's emotions are raw. They're reacting to what's happening right now.

2:06They haven't really always got time to plan. And generally, both people don't agree to get divorced at the same time. It does happen, but often one person is completely surprised. And that leads to a lot of additional stress and emotion that can be avoided if you're not planning for a divorce. You're planning for the potential of a relationship breakup, which can happen for so many reasons. How do you find that people navigate that conversation? Does it go down well? you know? No, it doesn't go down well with a lot of people because it's a bit like people raising the issue of having a will prepared.

2:47If you're young and buoyant and, you know, hungry for life, the last thing you want to talk about is potentially dying early or death or planning, you know, when you're not going to be here. And people are nervous around these topics. um prenups and post-ups have been fairly central to the super wealthy for a very long time because marriage in those arenas is pretty much about um a financial transaction um i'm not saying there isn't love there isn't passion there isn't all the usual things but if you're worth a great deal of money you're going to be more prompted to think a lot of people when they marry are going to be at the beginning of their lives, even if it's, say, around the 30 years of age, that's not a time when you think you need to plan for the future.

3:38I was talking to a young person last night because I said I was coming to do this. And she said, I'm determined to plan my finances early. And she's about 28. I said, good for you. But that isn't the usual approach. People want to live for today, don't they? For me, I always thought that prenup was more of an American thing. And I didn't think that we actually had it in the UK. but um i was listening to your one of your podcasts the she wolf and you said 42 percent of british couple british marriages end in divorce i thought i think america's around 50 or a bit higher so i thought that was an american problem but it's also here do you find like a lot of nowadays a lot of your clients because people are younger and like um i guess demographics are changing do you find like a lot of couples are coming to you younger and um like a bit earlier rather than like to do the pre-nups rather than before?

4:28No. No, people are still scared. Not really. You know, I'll give you an example of a client who was ahead of the game with somebody who'd been super successful at an early age. And he was actually adopted and had a very successful life in Europe with his adopted family. and he came to me at age 30 and he wanted to protect the first slice of his money for his family who brought him up to make sure they were taken care of and he then planned to share his wealth going forward and his fiance was absolutely happy with that arrangement. You know of course it's easier when there's lots of money to go around, it gets a bit trickier when there isn't enough money and that's why for the average person, although it seems like a bit over the top to have a prenup or postnup.

5:21In actuality, it's a very good idea and it's sound planning. Do you get pressure from the parents? Because I imagine the bank of mum and dad is a big difference. It's a growing issue, isn't it? Because they'll be like, wait, we're going to give you 100 grand. Well, let me tell you what happens when you get divorced and you don't plan. So a lot of people will find these days they can't get on the property ladder without mum or dad putting in a contribution. It's not that uncommon with sort of a slice of middle England where both parents on either side might come up with, say, 100 grand each. They say, darling, there's my 100 grand for you.

5:56And the other, so they start off with a 200 pot, thinking that, you know, that's fine. But actually, it isn't fine if you get divorced, and you then expect to ring fence that 100. Now, it's not so bad if you both put in 100. But if one party's put in 150, and one's put in 25, and the first principle of any divorce is the sharing principle of 50-50 and you depart from that depending on the supporting factors, then it can seem quite unfair if something happens and you end up in a relatively short marriage. People don't plan to meet other people when they're married, but it does happen. And if it happens and you find you're then financially disadvantaged because you didn't plan, that's a double blow you know and it also leads to a lot of resentment from the parents who've worked so hard to accumulate those funds to gift to their children you said then you start from this like first principle of 50 50 and then you depart from that yeah can we talk through that that process like what what do you mean from depart from it okay um it will depend on factors like length of the marriage, can depend on contributions.

7:09That will only apply if it's a larger contribution from one party that will depart from equality if there's enough money in the pot to meet what we call need, because need is the key factor in any divorce. So any court hearing a case will want to ensure that both parties are treated fairly and that both parties' immediate needs are taken care of. If they have children, those children's needs are paramount and take priority. There's also the equation of one of you might be a bigger earner. Therefore, you can recover quicker. So it's not unusual to end up in a situation where you might split to 70-30.

7:53So the person who's earning less needs a bit more capital because they can't remortgage in the same way that the higher earner could. That key important issue of pensions. One of the reasons I'm quite impassioned, if you like, about prenups and postnups is issues like pensions, because a lot of people don't realise, and men in particular who tend to have the larger pension, they seem to think that that's their asset. They've worked really hard. They've accumulated this money with contributions from their employer often over many years. And they expect to rely on that later. But in reality, it's important that a couple sit down together and work out if one of them is going to have the big pension and one may be have none, they're going to have to share that later if they're not together.

8:47Because if they were together, they would be sharing the funds, wouldn't they? So there's three ways you can deal with a pension. You can have a pension sharing order, which has the advantage of allowing the couple to basically work out the value and divide it according to the share that's decided to be fair, starting usually at 50-50. But sometimes the lesser party might have a small pension. So you'd take that off and then you'd balance it. and that has the advantage of achieving what we call a clean break so they go off into their future lives with financial independence there's something else called offsetting where one retains the pension but they get more of say the house sounds attractive but you can't end up these days with no provision for your elderly life and i mean i'm not i'm obviously considerably older than both of you two but who knows who knows what's going to happen to pensions they're getting pushed in further and further into our old age and so it's going to be really important that i think most of us have a transitional period where we might work more flexibly with a top-up of pension but most people are not going to be able to not have any pension provision because the state just are not they're not going to be able to afford it you can kind of see why people wouldn't want to share their pensions.

10:11Yeah, but you can also see why, like, in the modern world, you need two incomes to raise a child. And in the past, we valued the homeowner, the homekeeper more, didn't we? We basically said, we're talking traditional circumstances, we're not trying to be sexist, but we basically say the man goes and works and the woman stays at home. And both of those roles in a household are equal. They are of equal importance. You need one and the other. And now we're basically saying, oh, no, you decided to stay at home and it's your fault you didn't save anything. Well, yeah. I mean, the court's view is it is equality.

10:42If one of you stayed at home, there is equality. But, you know, more current to our situation is a situation where you carry on both going to work, but it inevitably happens that one of you steps down from their career a bit. I recently did a divorce involving a banker and a lawyer. The lawyer had stepped down from her career a bit because she was the homemaker and the lawyer and she thought, well, I could pick this up later. That's fine. You can. But it still means you've missed those critical career jumps when, you know, if you've been a careerist, you know, X years you do this, you get to associate, then you're a senior associate, then you're a partner if you're a lawyer, then you're an equity partner.

11:26If you come back to the table, having had 10 years of just pottering in and out of the office where everybody used to dismiss you as the mum and the part-timer, you're then going to have the challenge of re-establishing your career later in life. You're then competing with all the youngsters who haven't had the career break. And it's a real struggle to get anywhere near equality. So there does need to be an adjustment. But I think a lot of people who are young, and I've got quite a few young nieces and nephews who are young married people with young children, they're open-minded to this now. They are more committed to sharing the burden, taking the paternity leave, and making sure there isn't that huge inequality.

12:10Yeah. But that doesn't mean they shouldn't be planning because, you know, we're still at a stage in life in the world we live where a lot of businesses are still not committed to things like pensions. They're now being forced to contribute. Employees are being forced to contribute. But there are lots of professions where people don't have any pensions or they have pensions that they treat as a kind of a little bit of a savings pot, but they don't keep up with it. And when financial pressure hits them, they drop away from that. So it's important that you keep, you know, readdressing your situation throughout the relationship together in an open and transparent way.

12:55Yeah, and I think I look at Jeff Bezos and Mackenzie, is it Mackenzie Bezos? And like the flack that she got because she got billions, right? But then at the same time, I don't think people realize that she was a genius. They met at a hedge fund together. She was working at this quant hedge fund with him. And she basically said like this man might change the world, which he did. So I'm going to support him from the background. And there's like a sacrifice there. And so with me and my partner, what I do is, no, I'm not inventing Amazon, right? You know, but I'm making YouTube videos and it's all consuming.

13:29And every day she's like my therapist and like my person that deals with me. You know, we contribute to the house together, but she's like a business partner from a psychological perspective. And I think Mackenzie to Jeff was probably that as well. I don't think people value that. You know, if you might have someone who's a high flyer who comes home really stressed at night, Who's the person they offload on? It's the partner. Well, I've done divorces where, you know, it tends to be the woman, is highly intelligent, creative, has been a homemaker. I've had clients who've basically renovated huge properties.

14:08One divorce I did, I had to come to court with a whole photo album of her renovating this beautiful property, which they then sold for a lot of money. And on the other side, the pleading suggested that all she'd done is pick a few bits of tiling and chose the colours. I had pictures of her lifting out, you know, window frames, putting in doors, researching the history of the building. And, you know, that's a kind of direct connection to that sort of contribution. but sometimes the more successful the man in particular is the more support they need the more flexibility the wife has to show and the children have to show and an understanding of i can't work international travel how can you have how can you have a job that people take you seriously in if you're going to be saying well i might have to move in a year because i've got i might be on the other side of the world because he's landed this great job um and somebody's got to be there to catch all of the, you know, the issues that are going on in the background.

15:12And that's why the courts treat that level of contribution as very significant. Last time we recorded, Tomei, and you were having some real dramas with your accountant. So how's that been going, mate? They're sacked. So drama sorted. They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much. I mean, I've got pretty simple taxes. And yeah, they were charging me thousands. They saved me some money, but yeah, I had to move on. Slow and expensive. Pretty much, yeah. This is one of the reasons that we're really happy to be partnering with TaxApp.

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17:37If you're a business that needs to prove security and compliance, visit Vanta.com forward slash making money to sign up for a completely free demo today. That's Vanta.com forward slash making money. There's a link in the description though, so you can just click that. So all the divorce drama can be avoided with a prenup, but now... Well, okay, I'm only hesitating because a prenup is a starting point, okay? But you've got to keep that document up to date, okay? It's got to be reviewed. So if you have like another kid or you... So what you would do is you'd have a prenup, and then at the appropriate stage where there's something changing in your lives, you'd follow that up with a postnup where you would kind of agree.

18:23You might agree at the point of having children that you want to reorganise the finances, you want to plan things like schooling, what's going to happen if sadly the relationship goes wrong, how are you going to approach it? So it's very important that you carry this thought-prompting process throughout the relationship. I mean, when I first started doing this job classically, and I acted against all the moneyed husbands in the beginning, I was in a firm that acted for all the city wives, and I don't mean the city wives who were in the city, they were married to the city guys. They knew nothing about the finances.

19:03And in the good old days, we used to say, well, bring in any piece of the paper you can. You're not even allowed to do that anymore because we have to be completely transparent of what we know. And you can't, you know, invade the privacy of the other parties. You're relying on them being honest. There's a lot of people and most people are honest, but there'll be that small slice, who've never been honest and have always been covert and have always hidden a large slice of wealth. And that then escalates the cost of the divorce because someone like me can't advise appropriately and reasonably if I'm in the dark.

19:40So the first thing I say to a client is, even if they come and they sit down in front of me and they say, Ashley, what I really want is an amicable divorce. I've heard that the best thing is not to go to court and I say fine yes alternative dispute options are very important mediation arbitration but you can't do any of that if you don't know what's in the pot so let's start off with disclosure and if we had in place some advanced disclosure and an understanding that speeds up that process but to play devil's advocate I feel as a man not being sexist but have you heard this song by West gold digger she'd take my money yeah so I think a lot of guys especially more in America than here but like a lot of like famous athletes or people get trapped often so like a celebrity like a model might purposely get pregnant so they can take some of their money so um in times like that or in times like say they're married for a year and then she runs off she just wanted his money or she's in there's infidelity it's kind of understandable that the man or the woman if it if the other way around, might not want to disclose, whoever the breadwinner is, might not want to disclose all their assets.

20:50They're like, this person broke my heart. They tricked me. I thought we'd be together forever. That would be a major mistake on their behalf. Just not disclosing all their assets. If you don't disclose, and then the disclosure that was hidden becomes transparent, and it often does by reason of various reasons, you can re-challenge the settlement because it wasn't done in a transparent way. So obviously, as my career developed, I ended up dealing with the asset holders. And some people in my family career have been extremely wealthy, sports people, extremely wealthy entrepreneurs, assets all over the world.

21:31The first thing I say to them, we're going to protect these assets to best advantage. I need to know everything. Well, how do you find out if there isn't? So you get a hunch like this woman or man is lying, they're hiding something. Well, we carry out a forensic review of everything. So generally, unless you've planned for years to get divorced, which most people don't, to be fair, there'll be an audit trail of your money. So you might have accounts you have that you shut down. You might have accounts that you're making payments to. that, you know, these days, you know, your bank account is like a storybook, isn't it?

22:11An account like an American Express account, it so over describes what you do, people don't seem to realise how there's going to be a trail. You know where people eat, you know, yeah, yeah, yeah. Yes, you know, I hate to state the obvious, but you'd be amazed what turns up in people's credit card statements. And they don't... Just only funds. And they don't... Just only funds. You know, trips abroad. Yeah. I didn't know you were abroad then. Yeah, yeah, yeah. Why are you buying flowers over there? Gifts to people. Yeah, yeah, yeah. That sort of thing. So if you're having a kind of semi-double life, and the temptation is there for people who have everything.

22:46They've got, you know, enormous resource. There's the temptation they get a bit bored. People grow apart in relationships. People kind of sometimes come to a bit of an agreement between them that they'll have a kind of… Open relationship. Yeah, open relationship. But when people have an open relationship, they don't always realise that could lead to, you know, a division of assets at some point. And that's something I haven't prepared for, but they're prepared to have an open relationship. Justin Timberlake and Jessica Biel have a prenup. I thought you were going to say open relationship. That guy, right?

23:26You've got Jessica Biel and a good relationship. And he's got an open relationship. Wow. Okay. Yeah, by his course. by his car. If he cheats on her, she gets$500 ,000. That doesn't seem like a lot. It isn't very much. She's surely got a lot of money herself. And Beyonce and Jay-Z have a similar one, but I think she gets like... 500 million. She gets 5 million if he... 5 million for each child and like 1 million every time he cheats or something. So every time he has a... No, 1 million for every year of marriage if they have a divorce. But again, she's worth hundreds of millions. I know, but...

24:00Well, I hate to be the party pooper here, but in England and Wales, we don't allow clauses like that. So it wouldn't be... For every illegitimate child, you get a million quid. Not even if you cheat in a marriage. It doesn't matter. It doesn't matter. The documents in this country are designed to allow people to plan their finances, allow what happens if they have children, allows what happens when they sell properties. It doesn't allow us to manage their relationship. um i i wouldn't say that there aren't post-ups that are drawn up on the back of infidelity i've had some really quite interesting ones i had one that was um many many billions of pounds that had to go into a separate account involving and this isn't about this as many years ago involving russians uh where he cheated in a long marriage and she said okay i now feel insecure i want you to park some money for me and he said fine I don't want to get divorced he was you know as far as he was concerned she was his rock but you know if he played away he was happy to park some money in her name and that's what they did um so post-ups can address infertility infertility because the thing is they create distrust should people just not get married uh no I think I think marriage is a very important part of our society.

25:26It gives the security a lot of children in particular benefit from. Sadly, I have to deal with cases where there isn't a marriage. And my only way of providing for children in that scenario at the moment is under what's called Schedule One of the Children Act. And that essentially allows mother as the carer, usually the primary care of the children, to make an application under a piece of legislation that was not designed to facilitate this scenario. And it only allows you to seek provision of housing whilst the child's minor, so it's not permanent. You might get lump sum orders to deal with debt or the child's needs.

26:12You might get child maintenance if you're wealthy enough to earn at least$156 ,000 a year. If you're below that, you still have to rely on the child support agency. You can't get top-up maintenance. And there are other reasons why you might get money through that medium, but it's very unreliable. And generally specialists like myself tend to deal with these cases on a regular basis, but some family lawyers would hardly come across a Schedule I case because people don't know what rights they have and they don't explore it. And what's shocking to me as a father is that you're basically implying that there's parents out there that wouldn't look after their children as a matter of moral duty?

26:53The thing is that I have learnt over the years that people have a way of deciding what they think is fair. So my classic interview with particularly wealthy men used to be they'd sit in the room with me, they'd talk to me about how they wanted to share, et cetera, et cetera. And then after about three-quarters of an hour I'd get down to nitty-gritty of what they actually considered to be in the pot. So they would then exclude lots of things like they considered their business interests to be outside the pot. They considered their pension might be outside the pot. They might suggest their significant investments are outside the pot.

27:35What they thought was in the pot was the house. Some joint account savings. They might even have thought about, you know, in the right circumstances, setting up some trust money for their children. So I'm not saying that everybody's immoral, that they're not loving of their children, but not everybody has the same approach to sharing as other people. And that's why when you marry, it is a significant step because you're at some point going to be facing a third party analyzing what should go into that pot. I mean, I once dealt with, interestingly enough, a young man who, he was a teacher, primary school teacher, and he married his childhood sweetheart, who happened to inherit a great deal of money through her father.

28:26and the reason that they got divorced was she didn't want to have children and he desperately did want to have children they're five years into their marriage and he was kind of forced out of a what he would have considered his lifetime relationship without much to show for it and he was too embarrassed at that stage because men tended not to make financial applications they just She used to disappear into the ether and think, well, I'm a man, I can't possibly make a claim. And I had to negotiate what I thought was a fair settlement so that he could start again. And I insisted that we looked into how much it would cost him to rehouse where they were living in something sensible.

29:08And at the time, the right figure was 500 ,000. And it, you know, it meant little or nothing to her family to give it to him. But initially, there was a lot of resistance. Are there any differences between the pre and post-nop and what's in them?