Written by Rachel Duke
“Pre-nups are only for the super-rich”
“Pre-nups are unromantic”
“Prenuptial agreements aren’t legally binding”
“I’m entering into a civil partnership so I can’t get a prenuptial agreement”
“What if things change?”
There are many misconceptions about prenuptial (also known as premarital) agreements and with Brooklyn Beckham rumoured to be about to sign one (who would have thought a Beckham would ever be the financially weaker party?!) it seems a good time to review what they are, their legal status and when they may be appropriate.
What is a Pre-nup?
A pre-nup is an agreement entered into by two people prior to a marriage or civil partnership which sets out how they would like their assets divided in the event that the relationship breaks down permanently.
Sometimes a couple may want to enter into such an agreement even after the marriage has taken place. This is known as a post-nuptial agreement, or post-nup.
The status of pre-nups in England & Wales
It is true to say that both pre and post-nups are not technically binding in the Courts of England & Wales. This means that the court is not bound by its terms when making financial orders in any later divorce or dissolution proceedings.
However, back in 2010, the Supreme Court (the highest court in England & Wales) made a binding decision in the case of Radmacher v. Granatino, that the courts should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances it would unfair to hold them to its terms.
So, if a pre or post-nup is carefully drafted, the parties have fully disclosed their financial situation to each other, neither party has been under pressure and they have both had independent legal advice; there is a good chance that it will be upheld by the court. Even if the court does not think the exact terms are fair, in these circumstances it is likely to be taken into account, at least to some degree. So even in that scenario, it may be preferable to not having one at all.
Marital agreements drafted in other countries may not meet all these requirements and may not be upheld by the courts in England and Wales. If you have an international element to your relationship, you may need an agreement drawn up in more than one country. You should certainly seek expert legal advice.
Informal agreements that are not drafted by experienced professionals are unlikely to be upheld by the court.
It is not a good idea to sign a pre-nup just before the marriage or civil partnership. That opens up the possibility of one party arguing later that (s)he was under pressure to sign. Ideally a pre-nup should be signed more than 28 days before the marriage or civil partnership. You need time to agree the terms and for it to be drafted.
So, if you are thinking about a pre-nup, you need to include it in your pre-wedding planning and you should book in a consultation ideally at least a couple of months in advance.
When is a pre-nup a good idea?
A pre-nup is not just for the rich and famous. You might wish to consider one in the following scenarios:
- to protect a family business
- to protect assets that been built up prior to the marriage
- to protect assets awarded in a previous divorce settlement
- to protect particular assets, but not others
- if you have children from a previous relationship and you want to ensure that certain assets are reserved for them
- if you are both financially independent
- to protect inherited assets, including future inheritance
- simply to provide clarity about how you wish your assets to be divided if the relationship does break down.
Whilst it may seem unromantic, it could be argued that discussing such matters before a wedding or civil partnership can reassure you both that you are on the same page and that the relationship is about love, not money. Knowing how each other view these issues and having a clear understanding and agreement about how assets should be divided could reduce potential strain during the marriage and animosity, stress and expense if you do decide to go your separate ways in the future.
This might be particularly important if you have, or plan to have children. It is likely to make a “good divorce” much easier to achieve.
Reviewing a pre-nup
With the best will in the world, no one has a crystal ball and circumstances may change during the marriage such as to make the terms that you once agreed, no longer fair.
Examples might be if you have children and one of you gives up your career to care for them. Or, a long-term illness or disability. Or if you decide to move to another country.
So, if you enter into a pre-nup, it is vital that you do not simply stuff it away in a drawer and forget about it. A pre-nup must be reviewed periodically to check that it remains fair. If it needs to be changed then you can agree new terms.
If you want to receive further advice in relation to a prenuptial agreement, please contact our expert Family Team on 020 8301 4884 or family@alettashaw.co.uk