A prenuptial agreement or “prenup” as they are often known is a legal document drawn up by a couple before their marriage. A pre-registration agreement can be similarly prepared for those entering into a civil partnership. These agreements will set out how the couples intend their assets to be divided between them in the event of a divorce.
The aim of the prenuptial agreement or pre-registration agreement is to provide clarity for couples in the event that their relationship breaks down. Rather than leave the redistribution of assets to the discretion of the courts, a prenuptial agreement offers certainty as to how family finances can be resolved in the event of a divorce.
Is a prenuptial agreement legally binding?
Whilst prenuptial agreements are not necessarily legally binding in the UK, they are becoming more and more accepted by courts as proof of a couple’s intentions should they divorce in the future. In February 2014, the Law Commission published its report “Matrimonial Property, Needs and Agreements” which recommends that for prenuptial agreements to be enforceable, certain requirements be met. These are in summary:
- The agreement must be contractually valid ( and able to withstand challenge on the basis of undue influence or misrepresentation, for example). This means that it must be entered into freely and willingly by both parties. No pressure should be put on a party to enter into the agreement.
- The agreement must be made by deed and contain a statement signed by both parties that they understand it is enforceable and will partially remove the court’s discretion to make financial orders.
- The agreement must not have been made within 28 days immediately before the marriage or civil partnership.
- Both parties must have received, at the time of making the agreement, disclosure of material information about the other party’s financial situation. If it later materialises that full disclosure was not provided it is likely the agreement will not be upheld.
- Both parties must have received legal advice at the time that the agreement was formed.
- The terms of the agreement must not prejudice the reasonable requirements of children.
What would a prenuptial agreement include?
Every couple’s prenuptial agreement will be prepared based on their individual circumstances.
The agreement should contain an inventory of each of your assets, how you wish for them to be dealt with during your marriage and how they will be split should your relationship break down. If there are any assets you would prefer not to be divided or split between you and your partner if you were to divorce, then these should be included in your pre-nuptial agreement.
- Protecting one party’s inherited money, assets or savings;
- Protecting children’s inheritance or specific assets;
- How joint assets should be split;
- How a business should be dealt with;
- How debt will be shared;
- How pensions should be dealt with;
- How stocks and shared will be split;
- Whether any spousal/child maintenance should be paid and how much.
What can’t be included in a prenuptial agreement?
It is important to ensure your prenuptial agreement is properly drafted so that it is enforceable. Whilst a wide range of assets can be included, there are strict rules about what can and can’t be included. Issues which are excluded are:
- Child support;
- Child arrangements including visiting arrangements and decisions about religious upbringing and schooling;
- Illegal or unfair matters;
Do I need a prenuptial agreement?
If you have significant more wealth than your future spouse, or are likely to acquire assets in the future you should give consideration to a prenuptial agreement. Prenuptial agreements protect your personal wealth in the event of a divorce and are particularly important for those with a large inheritance, landowners, business owners, couples marrying later in life or entering a second marriage.
Can you change your prenuptial agreement after your marriage?
A prenuptial agreement cannot be modified after its been executed, however during the marriage you may want to prepare a postnuptial agreement. A postnuptial agreement can take into account any change in circumstances that cause you to seek to vary the terms in the original agreement. This document would replace the original prenuptial agreement.
I am already married, is it too late for a prenuptial agreement?
Following your marriage you can enter into a postnuptial agreement. This should be prepared in the same way as a prenuptial agreement in accordance with the Law Commission recommendations (set out above) if you want it to be upheld by a court in the event of your divorce.
When will the court refuse to enforce a prenuptial agreement?
The key question the court will consider when deciding whether to enforce the prenuptial agreement is whether it is fair to both parties. They will consider the points set out in the recommendations made by the Law Commission including whether there was full financial disclosure when the agreement was entered into and that you both obtained independent legal advice.
The Supreme Court set out the following three factors which increase the likelihood of a prenuptial agreement being upheld in court proceedings:
- It must be freely entered into;
- Both parties should understand the implications;
- It should not be unfair and hold parties to their agreement in the circumstances prevailing.
How do I make a prenuptial agreement?
In order for your agreement to have the best opportunity of being upheld by a court, you must:
- Have the agreement prepared by a qualified family lawyer;
- Both parties must obtain independent legal advice;
- Both parties must fully understand the agreement and agree to it willingly;
- Both parties must disclose all assets and property fully.
Choosing the right solicitor for your matter is crucial and we therefore offer a free initial consultation so that you can find out more about our services and decide whether we are the right fit for you.
