1. What is a prenuptial agreement?
A prenuptial agreement (or ‘prenup’) in the UK is a legal document drawn up between a couple before their marriage to outline how each of their assets will be divided between them in the event of a divorce.
Assets including property, debts and income are usually covered in a typical prenuptial agreement to help couples avoid any financial surprises if the relationship were to break down in the future.
Prenuptial agreements are more likely to be put in place when one partner already has, or is likely to acquire, more assets than the other. For example, those with a large inheritance, landowners, business owners or couples who are marrying in later life or who may be entering into a second marriage.
2. What is the purpose of a prenuptial agreement?
The key purpose of a prenuptial agreement is to provide clarity for couples around how their assets will be divided in the event of a relationship breakdown and the exact details vary depending on your case.
Typical prenuptial agreement terms cover:
- Protecting children’s inheritance or specific assets
- Protecting inherited money, assets or savings
- Giving you both a say in how assets will be split if you decide to divorce
- Allowing one partner to retain full control of business ownership
- Protecting you from your partner’s debt
3. Why should I have a prenuptial agreement?
You should consider entering into a prenuptial agreement (often called a prenup) before you get married if you want to determine how your property and finances will be dealt with during your marriage, and what will happen to them if you get divorced.
If you’re entering into a civil partnership, you can have a pre-registration agreement drawn up in the same way.
A prenup can help you to protect your, or your spouse’s, wealth in the event of a divorce. Prenups offer some certainty in circumstances where you would prefer to agree in advance the distribution of your assets on divorce, rather than leaving it to the discretion of the courts.
4. What should be included in a prenuptial agreement?
Prenuptial agreements are put in place to protect a range of assets and are completely tailored to your and your partner’s needs.
Usually, they will contain an inventory of each of your assets and details on how you both wish for them to be looked after during your marriage and how they will be split should your relationship break down. If there are any assets you would prefer not to be divided or split between you and your partner if you decide to divorce in the future, these should be included in your prenuptial agreement.
Prenuptial agreement clauses usually include:
- Property held in your sole name or in joint names
- Savings held in bank accounts
- Premium bonds
- Stocks and shares
- Pension pots
- Business interests
One of the best places to start when creating a prenuptial agreement is to make a list of all the assets you own, both solely and jointly, and then decide on how you would like them to be dealt with in the event of a divorce.
When signing a prenuptial agreement, you will be able to decide whether one partner keeps the assets, whether you will split them and what portion each of your will receive. A prenuptial agreement may prevent your partner from automatically receiving a share of your assets in any divorce settlement.
5. What cannot be included in a prenup?
Although premarital agreements can cover a wide range of assets, there are strict rules on what can and cannot be included. Not considering these when signing a prenuptial agreement could result in the agreement not being taken seriously in court.
Issues that cannot be included in a prenuptial agreement are:
- Child custody including visitation, religious upbringing and schooling
- Child support
- Personal matters
- Illegal or unfair matters
- Lifestyle matters
6. What does a prenuptial agreement protect?
Can you protect your pension with a prenup?
Many people who are marrying later in life or for a second time do not want to risk losing part of their pension in a divorce settlement, so you can protect this with a prenuptial agreement.
Does a prenup protect future earnings?
Yes, if you want to protect any future earnings within your prenuptial agreement, you can include a clause for future income.
7. How long does a prenuptial agreement last?
A prenuptial agreement is a contract between you and your partner and will last for the full duration of your marriage.
8. Are prenuptial agreements legally binding in the UK?
Whilst prenups are not currently legally binding in the UK, they are becoming more and more accepted by the courts as proof of a couple’s intentions should they wish to divorce in the future.
In February 2014, the Law Commission published its report ‘Matrimonial Property, Needs and Agreements’ which recommends that for prenuptial agreements to be enforceable, certain requirements must be met. It is summarised as follows:
- The agreement must be contractually valid (and able to withstand challenge on the basis of undue influence or misrepresentation, for example). It must be entered into freely and willingly by both parties.
- The agreement must be made by deed and contain a statement signed by both parties that they understand it is enforceable and will partially remove the court’s discretion to make financial orders.
- The agreement must not have been made within 28 days immediately before the marriage or civil partnership.
- Both parties must have received, at the time of the making of the agreement, disclosure of material information about the other party’s financial situation.
- Both parties must have received legal advice at the time that the agreement was formed.
- The terms of the agreement must not prejudice the reasonable requirements of children.
You can find out more about how a prenuptial agreement should be written here.
9. Are prenuptial agreements effective?
Prenuptial agreements are not just reserved for the rich and famous; anyone who wants to protect any property and assets they bring into a marriage will find them invaluable.
The leading case authority on prenups is Granatino-v-Radmacher. Baroness Hale of Richmond gave a dissenting judgment on the case stating ‘the object of a prenuptial agreement is to deny the economically weaker spouse to the provision which she – it is usually although by no means invariably she – would otherwise be entitled.”
As the Law Commission report recommends that prenuptial agreements should be made legally binding in English courts, we expect to see prenups used on an increasing basis as people feel more confident that their terms will be taken seriously.
10. Can your prenuptial agreement be modified after your marriage?
A prenuptial agreement cannot be modified once it’s been agreed or once you’re married. However, postnuptial agreements are a great alternative if you want to change the terms. This is treated in the same way legally as prenuptial agreements but it is created after marriage.
11. How long before a wedding should a prenup be signed?
A prenuptial agreement should be signed at least 28 days before the marriage with all assets and property owned by both parties disclosed.
12. When will the court refuse to enforce a prenuptial agreement?
For a prenuptial agreement to be upheld in court, the agreement must be considered fair to both parties. This will mean you both need to fully outline your financial circumstances and seek independent legal advice on your agreement.
The Supreme Court set out the following three factors that will increase the likelihood of a prenuptial agreement being upheld in court proceedings:
- It must be freely entered into
- Both parties must understand the implications
- It should not be unfair and hold parties to their agreement in the circumstances prevailing.
13. How do I make a prenuptial agreement?
To give your prenuptial agreement the best chance of being considered by the court you must:
- have the prenuptial agreement drawn up by a qualified family law expert
- both seek independent legal advice
- fully understand the agreement and agree to it willingly
- disclose all assets and property fully
Our highly experienced family lawyers have a wealth of experience in drafting effective prenuptial agreements, tailoring them to meet individual requirements which can determine how possessions – from substantial property to the car – are dealt with.
Please contact us if you’d like to find out more about creating a prenuptial agreement.
14. What will a prenuptial agreement cost in the UK?
The cost of prenuptial agreements varies on a case by case basis and your requirements as a couple. To some extent, this depends on the detail you wish to include in your prenup and whether there is to be a full exchange of financial information or whether this is set out simply in appendix format. We offer a fixed fee service for preparation of prenups and will confirm the cost once we know your requirements.
Contact our family law experts now to discuss your individual needs or to make an appointment for a confidential meeting.