In the United Kingdom, prenuptial agreements are becoming increasingly popular among couples. While nobody goes into a marriage expecting to divorce later in their lives, you can’t help but notice the rising number of divorces that are filed every year. As a result, you find many spouses opting for prenuptial agreements, commonly known as ‘prenup’, which is meant to protect them from any form of acrimonious or protracted divorce in the event of a separation. But what’s a prenup? Why do people apply for one? Or what are the crucial considerations you need to make when applying for one? We are going to cover all these questions in this article.
What is a prenuptial agreement?
In simple terms, a prenuptial agreement is a legally binding agreement that sets out how a couple should subdivide their assets between themselves in the event of a divorce. This agreement is established before the couple gets married, where it sets out the rights of the spouses with regards to the property, income, debt, or any other assets that they acquired such as inheritance or joint purchases. It simply dictates ‘who gets what’ after a separation. Mostly, people think that prenups are used by wealthy individuals who are looking to protect their assets from a less wealthy spouse. While there might be some truths to it – given all the public divorces by famous people where you find prenups appearing – in actuality, just about anyone can apply for a prenup and for a number of reasons.
How does a prenuptial agreement work?
The primary intention of a Prenup is to provide certainty and clarity around arrangements just in case your marriage comes to an end. The agreement saves you of all the uncertainty, time plus stress of arguing with your partner with regards to your finances if such a time comes. In essence, the agreement protects certain assets from being shared.
Who should get a prenuptial agreement?
As you may know, when you get married, any assets you own become matrimonial assets. What this means is that, in case you and your partner separate, the assets can be shared between the two of you, and both of you can also claim. But as we stated earlier, a prenuptial agreement allows you to ring-fence certain assets, protecting them from this eventuality. Remember, these assets don’t need to have a high financial value or be in your possession at the time of signing the agreement. Now, who should consider getting a prenup? Here are some of the factors to consider:
- If there is an existing disparity in wealth between you and your spouse – this is one of the most common reasons why many people consider getting a prenup before getting married. If you are bringing more assets than your partner into the marriage, you stand to be disproportionately affected in the event of a divorce, especially one where the assets get to be split equally. But with a prenup, you will be able to safeguard these assets and maintain them as solely yours.
- When there is an expectation of wealth in the future for one spouse – as we mentioned, a prenup can be used to protect assets you don’t have but are expecting them in the future. If one party expects a significant increase in their future income – either from their career or investments – or an inheritance they stand to gain, then having a prenuptial agreement in place ensures that these future assets are not assumed to be shared property among both parties, should they divorce.
- When there is a business to protect – of course, assets don’t come in the form of money, property, investments, and other financial forms only – if there is a partner coming into the marriage and is a business owner, then that business also counts as a significant asset that a marriage and a subsequent divorce could affect. Now, for your sake – as the business owner – and also to safeguard the future of any employees or other individuals that are dependent on the business, having a prenuptial agreement in place ensures that the business won’t be up for sharing in the event of a divorce.
- When there is an inheritance to protect – anyone who expects to receive an inheritance in the future can protect it from sharing conflicts in the event of separation with a prenup. This also applies to an existing sum of money that’s intended to be passed on as an inheritance to someone else. Nowadays, it is quite common for individuals to marry or remarry. But the question is, what happens to children gotten from past relationships when one remarries? Well, a prenuptial can help protect some of your assets from being subdivided after a divorce, just for them.
- The possibility of international divorce law – if you are marrying someone from abroad, you may find that the laws that are applicable in your partner’s home country might affect you, especially when settling divorce proceedings. Now, to prevent that from happening, a prenup can really be helpful, given that it helps you avoid falling foul of the laws, especially in sharing of matrimonial assets.
Are prenuptial agreements legally binding?
This is a pretty common question anyone looking to get a prenup normally asks, especially here in the UK. Here is the thing, a prenup isn’t automatically legally binding under UK law. However, a family court will always uphold a prenuptial agreement so long as it meets the qualifying criteria that were set by the Supreme Court. The court directed that for a prenup to be upheld, it must meet the following:
- It must be freely entered into;
- The agreement must be fair;
- Both parties must be aware of the implications of the agreement;
- Must be contractually valid;
- The agreement must be made at least 28 days prior to the wedding;
- The wider financial circumstances must be disclosed;
- The agreement should not prejudice any children;
- The needs for both parties must be fully met, and;
- Both parties must seek legal advice.
What is contained in a prenuptial agreement?
Essentially, a prenuptial agreement can cover various things. Now, when drafting your agreement, your lawyer will advise you on what to include in the agreement. This can include:
- Money – this covers money, in terms of savings or investment, held by one or both parties, or in joint or separate accounts.
- Property – a prenup also covers property each party brings into the marriage, and also what happens to the family home if the couple separates.
- Debts – not only does a prenup protects one asset, but it also protects one partner against debt liability should one partner build up debts.
- Children – the agreement can also dictate the rights of children from previous marriages to your assets or property if the marriage was to break down.
- Inheritance – the agreement covers the assets that one partner intends to pass on as inheritance, probably to his/her children, or an expected future inheritance one partner may gain in the future.
These are just some of the issues covered in a prenuptial agreement. Remember though that this list is not exhaustive.
Can one get a prenup after getting married?
As the name suggests, a prenuptial agreement is something that must be signed before one gets married. But if you are already married, it doesn’t mean that you can’t protect your assets if you want to. What you will need is a postnuptial agreement, which offers the same protection as a prenuptial agreement, and is also upheld in a similar way provided it has met the same criteria for validity.
Can a prenuptial agreement be reviewed?
Yes, it can. But the review or amendment of a prenup depends on whether the marriage circumstances change. It is only the changes in circumstances that may warrant a prenup review. These changes include the birth of a new child, or maybe a significant change in the financial situation for one partner. Ultimately, the agreement must remain reasonable and fair, no matter the changes. If you are not sure whether the changes in your marriage warrants a prenup review, you can always seek advice from a family lawyer.
How long does a prenuptial agreement last?
Typically, a prenup is designed to last throughout the lifespan of a marriage, unless stated otherwise. In some cases, couples may decide to have a “sunset clause” in the agreement, specifying the expiration date. But without such a specific condition in place, the prenup is assumed to last indefinitely. However though, even in such a case, it is recommended that you revise the agreement regularly so as to keep it up to date. The reason being, if a prenuptial agreement isn’t reviewed, and it becomes old, thereby not taking into account the changes in circumstances, such as the birth of a child, or illness, which may have changed the initial agreement is likely to lead to financial hardships and is therefore likely to be rejected by the court.
How much does a prenup cost?
The cost for a prenup can considerably vary depending on how complex each party’s financial circumstances may be. Now, for a typical agreement, you will pay around 1500 GBP to 3000 GBP as solicitor’s fees – the fee increases as the assets’ value and the complexity of the case increases. Most solicitors in the UK point sets an asset value of one million, as the limit for any arrangement for a fixed fee, beyond which you can incur larger fees, as bespoke services will be required.
Mediation for a prenuptial agreement
In real sense, a prenup can be a super complicated issue that requires in-depth discussion on all the issues that the couples may be disagreeing on – disagreements are pretty common. To avoid these disagreements, mediation would be a great way to get started on the agreement. There is no doubt that mentioning ‘prenup’ to your partner might cause some uneasiness in the relationship, particularly when one partner doesn’t want it. With a mediator though, the likelihood of the discussions turning ugly is significantly reduced. The mediator won’t be there to make decisions or rulings, but will instead be there to level the playing field, helping you to make better decisions. Remember this is a very important step since any court will invalidate a prenup that it deems unfair. Ultimately, marriage is an amazing thing, and a prenuptial agreement should never dampen the mood.
Pros and cons of a prenuptial agreement
As we have mentioned countless times earlier, deciding to sign a prenuptial agreement is something that requires careful considerations. The main benefit of doing so is essentially the foundation a prenup provides for a marriage – discussing the details of your assets with your partner, and discussing how the property will be shared in the event both of you separates. This creates a sense of security and transparency that will, in fact, make your relationship better going forward.
On the flip side, the security provided by the agreement may be illusory as it can’t be guaranteed that after years or decades into the future, the same agreement will be upheld by the court. Even though this might be a big concern for anyone looking to get a prenup, you can derive comfort from the fact that legal precedent in the UK is increasingly moving in favour of upholding prenups, as long as they are prepared correctly and fairly.
First and foremost, you should know that if you are looking to get married, and want a prenup, don’t wait till the last minute, you need to make it a priority in your wedding plans. Any agreement that is signed too close to the wedding days is less likely to be upheld, compared to one that’s carefully thought out and signed a month or so before.
Secondly, both parties must seek legal advice before agreeing to a prenup. This ensures that there are no accusations down the road if things were to go wrong, where one party may claim that they were under undue pressure to sign the agreement. So, every party must understand the implications of the agreement they are about to sign.
The next step is to ensure full disclosure of each party’s financial positions before they sign the agreement. Also, the terms and conditions of the agreement need to be thought carefully and make sure that the prenup is as precise, clear, and detailed as possible.
Also ask yourself, in the event of circumstances change, how are you going to deal with the change. These are something you have to plan beforehand.
Lastly, as we mentioned earlier, you ought to review the prenuptial agreement at agreed periods during the marriage. You should know that the length of the marriage can have a bearing on whether or not the agreement remains enforceable in the years to come.
Do I need a family solicitor for a prenuptial agreement?
Yes, you do. As we explained earlier, one of the grounds for the prenuptial agreement to be rejected in court is failure to seek legal advice prior to signing. Secondly, having a family lawyer will make it easier to other crucial factors the court uses to determine the validity of the agreement. These are the two most crucial reasons why you need a family solicitor to help you.
One of the biggest misconceptions with regards to a prenup is the thought that it’s more likely to ruin a good relationship, as it may indicate a lack of faith in the longevity of the marriage. However, this couldn’t be further from the truth. Having the knowledge of exactly what would happen if the marriage were to end, in actuality, doesn’t make any difference to the chances of that happening. So, don’t feel guilty about obtaining one. Get in touch with a family lawyer, and let them explain more to you.