What is a Prenuptial Agreement and what does it do?
It is an arrangement between a couple before they marry. Its aim is to regulate what happens a marriage breaks down and ends in divorce. If you are getting married, and you or your future spouse’s family have a business or farm that they want to pass on, a pre-nup may help protect it. Pre-nups are also useful in second marriages or where one or both parties have brought wealth to the marriage.
When should you consider a Prenuptial Agreement?
You and your future spouse should discuss this well before your marriage. You both should each have independent legal advice and disclose your finances to each other. It should be signed well ahead of your wedding.
Why have a Prenuptial Agreement?
A recent survey showed that 42 per cent of marriages end in divorce, with half failing in the first 10 years.
The courts have wide discretion on divorce. They can transfer property, cash sums and pensions between the parties and award substantial maintenance where appropriate.
Consider a pre-nup if:
- You wish to protect your business, trust, inherited wealth or assets owned before your marriage.
- If you want certainty about the financial arrangements if you divorce.
- If you want to reduce the risk of incurring significant legal fees if you divorce.
Pre-nups can provide evidence of what property was brought into the marriage. This is called non-matrimonial property. It is less likely to be divided equally because it is not the result of your marriage and joint efforts. Evidence of what properties or savings each party brought into the marriage can be helpful, especially if it is a short marriage.
Are these Agreements legally binding?
These agreements are not binding under English law. However, the courts have decided that where agreements are freely entered into with a full appreciation of the implications, the court will hold the parties to the agreement they have reached, unless it would be unfair to do so.
In deciding if the pre-nup is binding, the court will consider whether:
- Each party had independent legal advice before the agreement was signed.
- Each party make full disclosure of their finances.
- The possibility of undue pressure on one party.
- If applicable, the needs of your children.
You should expect that an agreement will be upheld by the courts if the factors above are met.
It is possible to alter or improve pre-nups in a divorce. If housing or income needs are not met for yourself and any children you look after, the court may alter the terms.
What is the best way of protecting assets?
For couples who marry, pre-marital agreements are often the best option, especially for those marrying later in life, or for a second time. For example, you may wish to ring fence what you brought into the marriage from your earlier relationship or to make sure you can pass it on to your children from that relationship.
Pre-nups can help to reduce the financial and emotional impact on divorce.
Sometimes it may be better to keep assets separate in your sole name. For example, if you have a large shareholding or brought a valuable property into the marriage. As well as signing a pre-nup, it is better to keep that property in your own name rather than putting it into joint names.
Unromantically, the best form of protection is probably not to get married!
The law for unmarried couples is very different to married couples. The courts have far more power to deal with property, maintenance and pensions when the parties are married. Where there are substantial assets existing before marriage, a family trust may be another way of protecting existing wealth.
What is a Postnuptial Agreement?
A postnuptial agreement deals with the same situation as a pre-nup. The difference is that a pre-nup is agreed before marriage, a post-nup is entered into during the marriage. A post-nup is something to consider if you previously separated but have reconciled and you want to avoid a dispute about finances if the relationship breaks down again.
What do you do if decide to have a Prenuptial Agreement?
Wollens have specialist family lawyers who can prepare a pre-nup for you (but not your future spouse as well). Please contact any of our family team who will be pleased to discuss your needs.