1. What is a pre-nuptial agreement?
A pre-nuptial agreement (also known as a pre-nup) is a formal, written agreement between two partners prior to their marriage.
It sets out ownership of all their belongings (including money, assets and property) and explains how it will be divided in the event of the breakdown of their marriage.
Pre-nuptial agreements are perceived by some to be pessimistic and unromantic. Others argue that a pre-nup is sensible in that it could prevent avoiding future disputes, potentially expensive court proceedings and protracted negotiations, and with a view to providing as much certainty as possible as to a final resolution.
Increasingly common these days.
2. So why get one?
In the UK we spend an estimated £10 billion on weddings each year (according to a survey of thousands of newlywed couples by hitched.co.uk). Newlyweds are the biggest spenders, typically parting with a little over £36,000, including everything from the engagement right through to the honeymoon.
The accepted idea of a ‘perfect wedding day’ is constantly changing, and ‘alternative’ weddings are becoming increasingly popular. With weddings no longer restricted to churches and registry offices, people get married in all sorts of places these days!
And it’s not just the choice of wedding venues that’s becoming less ‘traditional’.
Recent years have seen a big change in couples’ attitudes towards their finances. No longer just for celebrities, the number of couples adding ‘get a pre-nuptial agreement’ to their pre-wedding checklist is on the rise.
3. What are the benefits?
A pre-nuptial agreement provides a clear agreement that gives peace of mind for both parties.
Pre-nuptial agreements are an effective way of protecting wealth brought into the marriage, inherited wealth and business assets.
If there are children from previous relationships and the parties want to ensure certain assets are reserved for them and protect their inheritance rights. (It is also crucial to make a will)
Either party own a business which they’d like to retain control of.
If one party has outstanding debt, a prenuptial agreement with a ‘debt clause’ can protect the other party from being liable.
4. Are pre-nuptial agreements legally binding in the UK?
It is important to note that pre-nuptial agreements are still not legally enforceable in England and Wales – at least for now.
However following the landmark decision in the case of Radmacher v Granatino in October 2010, judges are attaching more weight to prenuptial agreements and are more likely to uphold them.
A pre-nuptial agreement is more likely to be effective / upheld if all the required criteria are met.
5. What is the criteria that needs to be met to give the best possible chances of it being upheld, if needed, at the future date?
• Must be drawn up by a qualified lawyer
• Both parties must have separate lawyers to avoid any claim of conflict of interest
• All assets must be fully disclosed by both parties
• Both parties must fully understand the agreement
• Both parties must voluntarily agree to it
• Both lawyers must confirm it was entered into freely and knowingly
• The pre-nuptial agreement should be signed at least 28 days before the marriage
6. What happens to the assets if a marriage with no pre-nup ends in divorce?
In the UK, once you are married, following separation either party is entitled to apply to the court for financial relief even if the marriage has been short.
The law relating to who gets what is not always clear, and sometimes people feel it is unfair, say for example if there are young children who need to be housed.
Therefore if at the point of marriage the parties assets are not of equal value, the best advice is to get protection by way of a pre-nuptial agreement
7. What about a couple who are already married, can they enter into one?
Yes, if they are already married and want an agreement in place to define what will happen in the event of the marriage ending, then they can have a post-nuptial agreement drafted. A post-nuptial agreement (or post-nup) can effectively do the same things as a prenup, except postnups are signed after marriage has occurred, but they do the same in principle and carry the same weight.