What is a pre-nuptial agreement & why should you consider it?
“We want prenup! We want prenup! (Yeah!), It’s somethin’ that you need to have”
Kanye West, Gold Digger
In the words of the recently divorced Kanye West, there has been a rise in the number of people who want a prenuptial agreement in place before marrying their significant other.
Just what is a prenuptial agreement?
A prenuptial agreement is an agreement that a couple enter before they marry, which sets out how they would want their finances to be divided between them if the marriage were to break down. The most common reason for people coming to talk to us to explore having a prenuptial agreement is that they want to protect a particular asset that they own before they marry. The sorts of assets clients seek to protect are a property, a business or, quite often, an inheritance.
Prenuptial agreements are not automatically legally binding in the United Kingdom. But they are likely to be upheld if the following steps are complied with, which are considered indicative of a well-formed agreement:
- Each person should obtain full independent legal advice
- Each person should understand and fully accept the implications of potentially compromising their marital claims
- The agreement should be signed at least (but preferably more than) 28 days before the marriage ceremony
- There should be no indication that either party is being forced to enter into the agreement
Crucially, the terms of the agreement should appear fair in all the circumstances of the case at the time of separation. In respect of the first bullet point above, a prenuptial agreement is capable of being contested, so it is particularly important that you take specialist legal advice in order to give your agreement the best possible chance of success. A prenuptial agreement can’t simply say one party gets everything. One of the most common reasons a prenuptial agreement is not upheld is due to the unfairness of the outcome of implementation of the agreement on one party.
Statistics show that for some years marriage has been in decline and cohabiting relationships on the rise. However, there appears to have been an increase in marriages after the English courts changed their approach to prenuptial agreements following the case of Radmacher in 2010, and the 2014 Law Commission report on marital property which set out recommendations around the formation of nuptial agreements. Historically, a main driver for not marrying has been the potential financial consequences for each party in the event of a divorce. A prenuptial agreement goes some considerable way to allaying those fears.
If you are already married, you may choose to have a postnuptial agreement. This is an agreement entered into after marriage or civil partnership that regulates the financial terms of any separation, divorce or dissolution. Postnuptial agreements are often entered into when, say, one party suddenly comes into some inheritance or wishes to embark on a new business venture. Although postnuptial agreements are not legally binding in the UK, if implemented correctly, they can be hard to challenge and offer significant security and trust within the marriage.
Common things that are covered in postnuptial agreements are:
- What would happen to property that either of you brought into the marriage?
- What would happen to the family home?
- What would happen to any property given to you or inherited during the marriage?
- What would happen to joint assets?
- What would happen to your pensions?
- How would you deal with any debts?
- Would either of you pay or receive any maintenance and, if so, for how long?
If you are thinking about entering into either a prenuptial or post-nuptial agreement and want to find out more information, contact Susi Gillespie or a member of our family law team on 020 3811 2894.
