What are prenuptial agreements and when do you need one?

With so much focus being placed on how and where you can hold a wedding at the moment, it’s easy to see why discussions regarding prenuptial agreements may have been put to one side.

Although a prenuptial agreement is undeniably a somewhat unromantic part of the wedding experience, it will provide a little more security should a marriage not work out quite as planned.  What this in mind, we thought it may be useful to answer some of the questions our clients regularly ask us about prenuptial agreements.

What is a prenuptial agreement?
A prenuptial agreement – or a ‘prenup’ – is a contract-style document a couple can put in place before their wedding. It is advisable to leave as much time as possible before the wedding for the preparation of the agreement. The Law Commission report which reported in 2014 recommended that agreements should be signed 28 days before the wedding and this is good advice in order to avoid any suggestion of undue pressure.

The agreement will set out how the money and assets both parties bring to the marriage would be separated if the marriage were to end in divorce. The agreement can also deal with future assets.

As people are now marrying later in life (and with more behind them than they used to), prenuptial agreements are becoming increasingly popular.  Couples can see there is a benefit to better protecting the money and assets they may have built up before their marriage.

Why should I think about a prenuptial agreement?
A prenup can help you avoid the lengthy and emotionally taxing negotiations over money, property and other assets that are unfortunately very common during a divorce.

Are prenups legally binding?
Prenuptial agreements are not formally legally binding in England and Wales as there is no statute in place to make them binding.

However, case law shows they are being given much greater consideration by judges.  One of the best examples of this was the ruling in the case of Radmacher v Granatino in 2010.  Ms Radmacher’s prenuptial agreement was able to protect her £106m fortune following the breakdown of her marriage.

In this case the court decided it should recognise a pre-marital agreement where both parties had entered into it freely, demonstrating both parties understood and agreed to the terms and as long as  it was fair.  The court also stated they felt the agreement was difficult to ignore as there had been full disclosure and legal representation, subject to the usual consideration of the circumstances at the time the agreement was entered into.

Even though these agreements are not yet binding, the growing number being upheld in court definitely suggests that having a professionally drafted prenup in place will afford you the additional security you want it to provide.

 Are prenups enforceable?

 In England and Wales, a judge will consider all the circumstances surrounding the preparation and signing of the agreement. The agreement must meet the following criteria:

• It must be fair and reasonable
• It must not prejudice any children
• Both parties must have had independent legal advice
• It must include full financial disclosure regarding all property, investments or savings
• Both parties must have a full appreciation of the implications of the agreement

Can your agreement include any type of asset?
Your agreement will be tailored to your specific individual circumstances.  This means while the most usual assets to include are savings, property, pensions, business assets and personal belongings of value, you can include anything else – current or future – you would like to be covered.

Are prenuptial agreements just for celebrities?
You will be surprised just how often we are asked this very question!  The answer is of course an emphatic no.  Prenuptial agreements are appropriate for any couple where one person is bringing significantly more wealth, property, or assets to the marriage than the other or what to protect a future asset for example an inheritance.

In considering whether a prenup agreement would be suitable for you we would  suggest you ask yourselves the following questions:

• Would it be difficult to split any of the assets you obtained before your marriage?
• Would you like to ensure any children from previous relationships receive the inheritance you want them to?
• Do you want to protect what you receive from an inheritance in the future?
• Do you have any business interests or investments you want to maintain control of following should your marriage break down?
• Are either you or your partner bringing any debt to the marriage that the other would not want to be responsible for should your marriage break down?

If the answer to any of these questions is yes, it may be worth arranging an initial and confidential discussion with us.

How Much Does a Prenuptial Agreement Cost?
While the fee will depend on the amount of work required to draft your agreement, we are always totally transparent when it comes to cost and will provide you with a fixed quote before you decide to proceed.

If you would like to contact our family team to discuss a prenuptial or postnuptial agreement (or have any other legal questions regarding your marriage or your family), please email Bernadette.Hoy@collinshoy.com  or call Bernadette on 020 8866 1820.

Photo by Etienne Boulanger on Unsplash