A prenup is a legal agreement made between two individuals before they marry or enter into a civil partnership.
The agreement itself can set out a variety of provisions as to how the couple intend to divide their assets in the event of any future divorce or family dissolution.
The agreement can also define which assets are classed as ‘matrimonial property’, i.e. assets acquired during the marriage or held in joint names, and those classed as ‘non-matrimonial’ such as inheritance or gifts received by one party or assets owned before the marriage.
This distinction is important as upon any relationship breakdown, the ownership of the assets will already be determined, which avoids any disputes (and subsequent time and costs involved).
This is in contrast to divorce proceedings without a prenup, as in these cases, depending on the financial position of each party, both matrimonial and non-matrimonial assets may need to be shared equally between the parties so that both parties’ needs are met.
In England and Wales, prenuptial agreements are not strictly binding in the event of a divorce, but the terms of the agreement may be decisive in the event of a dispute that the court deals with unless the effect of the agreement would be unfair.
There are several reasons to enter into a prenuptial agreement, even if you do not have significant pre-marital assets to protect.
A prenuptial agreement should be considered if there are certain assets that you would like to ring-fence before getting married or entering a civil partnership.
You may want to enter into a prenuptial agreement for the following reasons:
The above is not an exhaustive list.
A prenuptial agreement is a bespoke document and is tailored to your circumstances.
A well-drafted prenuptial agreement will help to provide clarity so that you and your partner make it clear to one another that certain property belongs to you alone and that it will not be shared in any future divorce.
There are certain things that couples usually include within a prenuptial agreement, including, but not limited to:
Again, the above is not an exhaustive list.
If you are getting married this wedding season, or sometime in the future, and would like to record both of your financial positions and intentions if you were to separate, then please get in touch with our Family Team.
If you do intend to enter into a prenuptial agreement, it is important to remember that the agreement should be drawn up at least 28 days before the wedding date.
Both you and your partner should obtain independent legal advice from separate solicitors, so you must allow time to instruct solicitors and for the drafting, any negotiation and finalising of the prenuptial agreement.
Although a prenuptial agreement sets out the parties’ intentions on a divorce, the agreements are not legally binding and so the court retains its ultimate discretion to determine the distribution of the assets on divorce.
However, the existence and contents of a prenuptial agreement must be taken into account by the court when the court considers financial remedy proceedings.
The influence and weight of a prenuptial agreement therefore depends on the circumstances of the case and also the circumstances at the time the prenup was entered into.
This is an important protection as there is the possibility that a prenuptial agreement has been entered into without one party’s full intentions or without fully understanding the agreement they are entering into.
The court would then take this into account when considering how much to rely on the provisions of the prenup.
In the case of Radmacher v Granatino [2010] UKSC 42 the Supreme Court held that: “the court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement”.
Provided that test is met, the court will give effect to a prenuptial agreement.
In simpler terms this means that the following will be considered by the court:
It is important to ensure that a nuptial agreement remains fair and meets the needs of the parties.
Therefore, it is prudent to review its terms if particular events happen or after certain periods of time have passed.
If a nuptial agreement is not reviewed and significant changes in the parties' circumstances occur, the court is unlikely to uphold its terms in any later financial remedy proceedings.
Formulating a list to include every type of event that should result in a variation of the terms of a nuptial agreement is difficult, but the following possibilities are commonly accepted as triggering events:
Implementing a review clause should reduce the possibility of the nuptial agreement being deemed unfair by the court in later financial remedy proceedings as it shows the parties have considered the change in circumstance, have renegotiated the original agreement accordingly and believe the varied agreement is fair.
A review clause is particularly important in the case of a young couple who potentially have many life changes ahead.
A prenuptial agreement can give more certainty as to the financial arrangements if you separate and a review clause should reduce the possibility of the nuptial agreement being challenged at a later date.
Both parties will need independent legal advice on the agreement, and they will need to disclose to one another information about their assets, liabilities, and income.
It is good practice to finalise the agreement in good time before the wedding or civil partnership ceremony so that both parties have sufficient time to consider the terms of the agreement.
If you are planning to marry or enter a civil partnership and you want to ensure that certain assets are protected from claims for financial provision on divorce or dissolution. If you have any more questions or would like more information, you can contact our Family Law Team below.
