A pre-nuptial agreement is a contract between spouses (or civil partners) made prior to a wedding or civil partnership. It is intended to regulate the ownership of money, property and other assets plus maintenance and responsibility for debts.
A post-nuptial agreement is the same concept; however, it is made when the parties are already married or in a civil partnership. The same considerations apply to both types of nuptial agreements.
Why have a pre-nuptial agreement?
In divorce or dissolution, the English courts have a wide discretion to divide assets and income fairly. The law’s view of fairness can be very different from that of the public or a particular couple. Whilst the court will consider all the circumstances of a case it may not give enough emphasis to variables such as:
- Inherited wealth, including those of a widow or widower
- One party wishing to retain control of a family business, such as a farm
- Future inheritances
- One party having assets fromtheir first marriage
- Large debts or obligations in the name of one party
In some cases; clients may may have experienced a divorce before and wish to avoid a repeat of the same process. It is also more common now than ever to marry later in life and begin a marriage with wealth. In this situation it is important that a prenuptial agreement is considered.
Are pre-nuptial agreements legally binding?
Strictly speaking in England & Wales the answer is no but such agreements may be upheld by the Court. A properly constituted agreement may be enforceable in another jurisdiction if the parties move aboard. Increasingly the Court is acknowledging that there should be a freedom to choose a fair outcome. Following the 2010 case known as “Radmacher” the existence of a pre-nuptial agreement will have a greater impact on outcomes. In short, a pre-nuptial agreement vastly increases the chance of safeguarding assets.
The courts have set out a number of factors that need to be in place for a pre-nuptial agreement to be upheld, which include;
- Both parties must have taken appropriate independent legal advice
- The lawyers giving advice must not have any conflict of interest
- Both parties must enter in the agreement freely and understanding the terms
- Both parties must openly give full details to the other of their financial circumstances
- The terms must be clear and certain
- The terms must be comprehensive
- There must be no undue pressure to enter the agreement
- The agreement should be signed at least 21 days before the wedding
It is, however, important to note that the most important factor is that the agreement must be fair and deal with all financial issues that the court has the power to deal with. Often nuptial agreements are ignored as they did not contemplate the financial needs of the weaker economic party. Hence advice is needed from specialist family lawyers.
As there is no way to predict the future, it can be difficult decision to make. Consideration needs to be given to likely changes in circumstances such having children, loss of employment, inheritances and large changes in the value of assets. It is advisable that any nuptial agreement should involve a regular review of the terms so that it retains the best chance of being enforceable, but above all continues to be fair to both parties. There is no set review period but a minimum of review every 5 years is a benchmark as the longer the marriage the more unlikely a nuptial agreement will be followed as the court may see contributions made at the start of a relationship as less important to a fair outcome.
Are pre-nuptial agreements worth it?
In life there are few guarantees. Whilst the law in the UK is evolving, it has never been more important to consider all variables when deciding on a nuptial agreement.
At worst an agreement has major evidential value as record of what each party had at the start and can help identify what has accumulated during the marriage. This is likely to help persuade a court that it may be fair to depart from the equal division of assets and help protect solely held assets. A pre-nuptial agreement may assist in resolving potential points of dispute and reduce the legal costs of a divorce.
If you have any queries regarding pre and post nuptial agreements, please contact our Family Law Solicitors in Guildford on 01483 451900