Prenuptial Agreements

We often hear stories in the media of wealthy individuals and celebrities having prenuptial agreements when they get married.  In fact, prenuptial agreements (often described as prenups) are not just for the rich and famous and any couple can have one before they get married or enter a civil partnership.  Here we look at what prenuptial agreements are, whether you might benefit from one and what should be considered when preparing a prenuptial agreement.

A prenuptial (or pre-marital) agreement is a bespoke legal document drawn up based on the agreement made by a couple before they marry or enter into a civil partnership.  The agreement sets out how they wish their assets and liabilities to be divided in the event that their relationship ends – essentially “who gets what”.

A prenuptial agreement may be particularly beneficial where:

• One of you has substantially greater capital or income than the other
• One or both of you wishes to protect assets you owned prior to the marriage or civil partnership
• One or both of you has children from a previous relationship and wishes to protect assets for the purposes of inheritance planning
• One of you owned business assets prior to the marriage or civil partnership
• One of you expects to receive a future inheritance or other source of wealth which you wish to protect

The first and most obvious point is that you need to put your prenup in place before getting married.  The process typically starts with a discussion between you and your partner on how you would like your assets (savings, pensions, investments, and of course your property) and liabilities (mortgages, loans, debts etc) to be divided up should your relationship break down.

Don’t underestimate how long this might take, and be prepared that the discussion might not all be plain sailing.  Marriage is usually characterised as an expression of love and commitment between two people, whereas preparing a prenup might be described by some as transactional, lacking emotion and assuming the worst will happen!  We say it is far better to think of it as a process of openness and transparency and that keeping the end goal in mind will help overcome any concerns.  After all, there is nothing to stop the agreement being amended or even voided in the future.

As your solicitors, we will be a helpful advisor through this process.  In order to prepare the prenuptial agreement for you, we will typically require the following information:

• What you each wish to achieve
• Details of your assets and liabilities and their values
• Details of your incomes
• What outcomes you wish to achieve for your current and any future children
• Details of any expected inheritances or other money you expect to receive

It is very important that both parties give a full and honest account of their financial situation at this point.  Failing to do this increases the likelihood that the agreement will be challenged by one party or even disregarded by the divorce courts should the marriage fail in the future.

Once you have provided all the necessary information, we will draft the agreement and make any refinements you need before it is signed.  You will see below that this should be done at least a month before you get married or enter your civil partnership.

This is an interesting question, as prenuptial agreements are essentially a private contract between two individuals.  The current situation is that the divorce courts do not have to follow the terms of a prenup, but following a ruling by the Supreme Court in 2010 the courts will generally make financial orders reflecting a prenuptial agreement as long as the following apply:

• It is freely entered into by both parties
• Both parties fully appreciated and understood what they were agreeing to
• Following the prenuptial agreement would be fair to the parties, assessed on a case by case basis

Note that “fair” doesn’t require both parties to be treated equally, but rather that undue hardship is not caused to one party.

In 2014, a report by the Law Commission recommended introducing what they called “Qualifying Nuptial Agreements”.  These were never formally introduced, but the Law Commission did give several guidelines on how an agreement should be prepared for it to be “qualifying” (read “enforceable”).  The divorce courts do tend to follow these guidelines when deciding how closely to follow a prenuptial agreement so it is good practice to follow them.  The guidelines are:

• The prenuptial agreement must be a valid contract
• It must be executed as a Deed, containing a statement signed by both parties that they understand what they are signing and that it might restrict the future discretion of the divorce courts
• It must not have been signed less than 28 days before the marriage or civil partnership
• Both parties must have made full financial disclosure to the other
• Neither party can contract out of meeting the financial needs of the other, or of any children
• Both parties must have received legal advice before signing

We will take all these factors into account when preparing your prenuptial agreement to give it the maximum chance of being followed by the courts.

As discussed above, a prenuptial agreement covers how your assets should be divided if you and your spouse/civil partner are still alive and divorce or have your civil partnership dissolved.  If you or your partner dies however, the normal rules of probate will apply, and without a Will the assets will start by going to the surviving spouse (see our more detailed page for the full rules).

If something different to this is required (and it probably will be), then we recommend that both parties draw up new Wills following marriage.  These Wills can cover the intricacies of providing for children from earlier marriages, distributing assets accumulated before the marriage, passing on business assets, tax planning and many more eventualities, much as a prenuptial agreement would have done if both partners had survived.

As you can see, the process of preparing a prenuptial agreement is not the work of five minutes, and requires careful planning and execution to make sure that it will be followed by the courts.  The Family Law team at Backhouse Solicitors have a wealth of experience preparing prenuptial agreements and are here to help guide you through the process.  For more information and advice or to book a free 30 minute consultation, contact our friendly team of experts today.

Tel:          01245 893400
Email:     info@backhouse-solicitors.co.uk
Visit:       17 Duke Street, Chelmsford, CM1 1JU
Or send us a message through the Contact Us page on this website.