Should You Create a Prenuptial Agreement?
Prenuptial agreements can be an important consideration for couples in many situations, such as where one or both partners are individually wealthy, are likely to inherit significant amounts or assets, or are remarrying.
When a couple marries, their assets are generally treated as becoming ‘matrimonial assets’, so that upon divorce, they come under consideration to be divided under a financial settlement. There is no steadfast rule, however, as to how these matrimonial assets will be divided.
Through a prenuptial agreement, couples can seek to achieve certainty of how their assets will be treated, should the relationship end.
What is a prenuptial agreement?
A prenuptial agreement sets out in writing, the rights of each spouse to any monies or assets they own or will own, including debts, income and inheritances, should the marriage fail. These assets could have been gained jointly or individually, or they may have been brought into the relationship upon marriage.
A prenuptial agreement seeks to either limit the amount that one of the couple could receive on divorce or state which assets would go to which individual, or both.
A prenuptial agreement could be worth considering where:
- you want to ensure that you will retain ownership of your home or any other property you own, should the marriage fail
- you are remarrying and want to protect your assets because you worry that if it’s gone wrong once, it could happen again
- you want to make sure that should the marriage fail, there’ll be no lengthy and expensive arguments about who gets what
- you want to protect your assets to ensure that your children are provided for, should things go wrong with your new spouse
- you are likely to inherit monies or assets in the future and want to make sure that your partner is marrying you for you, and not the inheritance
Are prenuptial agreements legally binding in the UK?
At the current time, prenuptial agreements are not legally binding in the UK. This means they will not automatically be upheld in court.
However, where a prenuptial agreement does exist, it is likely to be examined by the court to decide whether or not it should be upheld.
The court will make their decision on whether to uphold a prenuptial agreement based on a range of considerations. These could include:
- Did both parties have independent legal advice before agreeing and signing the prenuptial agreement?
- Were either party under pressure to sign the agreement?
- Did the party who will lose the most fully understood the consequences of the prenuptial agreement when they signed it?
- Did both parties fully disclose their financial situation and assets before the agreement was put in place?
- Was the agreement entered into less than 21 days before the marriage? This would mean that the agreement probably wouldn’t be upheld.
- Have there been any major changes to the couple’s circumstances that would make the agreement inappropriate, such as the birth of a child, for instance.
- Is the agreement fair, reasonable and realistic? Is the division of assets heavily in the favour of one party?
- Has the agreement been reviewed and amended since the couple married?
Each case is individual and there may be other considerations taken into account by the judge when making their decision.
What should be included in a prenuptial agreement?
A prenuptial agreement is written to suit the couple’s individual circumstances. It will generally include, but not be limited to,
- a list of each partner’s assets and finances
- how all assets and finances will be distributed should the marriage fail
- financial arrangements for children after the divorce
- a review clause, whereby the agreement can be reviewed in the future or should circumstances change
Taking specialist legal advice to assist you in drawing up a prenuptial agreement will ensure that you take all assets and possible scenarios into consideration, whether that be the birth of a child or one partner coming into an inheritance, for instance. A solicitor will advise you on all relevant areas of law and provide an overview of your situation now and in the future.
How to make a prenuptial agreement
Both partners must take independent legal advice to ensure that neither is unfairly represented or put under any pressure to enter the prenuptial agreement, and that there is no conflict of interests on the part of the solicitors involved.
There must be a full disclosure of each partner’s financial situations, including assets held.
Through discussion, and legal advice, the agreement is drawn up and finalised, taking into account how circumstances could change in the future, such as the birth of a child, loss of employment or the purchase of further assets.
The finalised agreement is then signed by both partners in the presence of a witness. Each partner should receive a copy of the agreement and a copy may be filed with each respective solicitor too.
Can a prenuptial agreement be updated over time?
If the couple’s circumstances change in a way that means the details of the agreement are no longer fair or appropriate, the terms of the agreement may be changed as long as both partners agree.
Can you sign a prenuptial agreement after marriage?
You may enter into an agreement once you are married but this would be called a postnuptial agreement. In all other aspects, it is the same as a prenuptial agreement.
If the married couple move out of the UK, will the prenuptial agreement still be valid?
A UK prenuptial agreement won’t necessarily be upheld by a foreign court.
Should a couple move abroad, they should take legal advice in the country they move to regarding their prenuptial agreement.
Are there any risks of having a prenuptial agreement?
You may agree to an item being handed over to your spouse, or a particular financial arrangement, in the agreement initially and then change your mind at a later stage. Unless your partner agrees, the prenuptial agreement can’t be amended.
As a prenuptial agreement is not legally binding, there’s a chance that it may not be upheld in court.
Circumstances change, for instance, the couple may have a child, and the agreement doesn’t take this into consideration or provide for their upbringing should the marriage fail.
One partner may not fully disclose their financial situation, especially their debts and financial obligations.
One partner may feel forced into signing to please their partner.
Why legal advice is important
Most couples enter a marriage with their eyes firmly set on a future together, but for those who have substantial finances and assets, or children from a previous marriage, a prenuptial agreement can be a sensible way to safeguard their livelihood.
An experienced family law solicitor will assist both partners in drawing up a prenuptial agreement that is fair, reasonable and adheres to UK law. Moreover, they can ensure that your prenuptial agreement has the best chance possible to be upheld in court should your marriage fail.
Whether you are the partner who wants the agreement to be drawn up, or are being asked to sign an agreement, having legal advice on your side can offer the reassurance that the prenuptial agreement will work for you and that your future is protected.