Prenuptial Agreements – frequently asked questions
Prenuptial agreements can raise challenging conversations between couples about to get married. There is the obvious and difficult dichotomy of: planning and securing your financial future set against spending your life with your partner in marriage.
However, these barriers are slowly coming down with more couples are viewing prenuptial agreements as a positive and pragmatic step towards organising their financial future in the event of divorce.
A prenuptial agreement is effectively a written contract between the two parties entered into before their marriage. The agreement specifies how each parties’ finances are to be dealt with after their marriage.
Typically, these agreements concern assets accrued by either party before marrying. These can be business interests or inheritance gifts from family members during the marriage. However, there are no strict rules about what can and cannot be included in a prenuptial agreement and they can include various assets, including pre-marital debt.
If you are considering a prenuptial agreement our specialist family lawyers provide experienced, cost effective drafting, review or advice on the appropriate terms for you. We also advise clients who come to us after a prenuptial is in place and divorce is being considered. Please do get in contact to discuss how we can help.
What are the benefits of a prenup?
Pre-nuptial agreements can provide certainty and clarity to the parties as to how certain assets are to be dealt with in the event of divorce. These contracts require the parties to be transparent from the outset about their financial situation and can invite constructive discussions concerning pre-matrimonial assets / inheritance / gifts and other assets.
These agreements are flexible and, as the courts are not involved, the parties can be creative in what is to be included as well as long-term arrangements, with a provision for a review clause, which is particularly relevant if there are children from the marriage and consideration of child and spousal maintenance.
Where either or both parties have children from a previous relationship, a prenuptial agreement can protect the financial interests of those children.
Divorce is also a very difficult and emotional experience where there can be acrimony. Potentially, a prenuptial agreement can be cost saving on divorce with much of the finances already decided.
What to include in a prenup agreement?
Pre-nuptial agreement are potentially suitable where one party brings assets to the marriage and seeks to distinguish them from future matrimonial accrued assets. Additionally, these agreements can include financial arrangements which the parties agree will apply post-separation. This can include both child maintenance payments and spousal maintenance payments. However, pre-nuptial agreements cannot regulate issues such as child arrangements, illegal matters or unfair matters.
Are prenups legally binding in the UK?
Until the ground-breaking decision in the case Radmacher v Granatino (2010), the Supreme Court did not give much regard to prenuptial agreements, and they remained a relatively modern concept.
Katrin Radmacher and Nicholas Granatino married in 1998 and in light of Ms Radmacher’s large inheritance, the parties entered into a prenuptial agreement. During their divorce proceedings in 2008, Mr Granatino made an application for a financial settlement and the Judge initially held that the prenuptial agreement should not be upheld as Mr Grantaino:
- Had not sought independent legal advice before entering into the agreement
- Their circumstances had changed, and they now had children
However, Ms Radmacher successfully appealed the decision and the Supreme Court determined that the pre-nuptial agreement was of “magnetic importance”, from which Mr Granatino could not renege. In the judgement, the Supreme Court further determined that pre-nuptial agreements shall be given decisive weight unless it can be demonstrated that they were unfairly created on had an unfair impact on one of the parties, given the tides and turns of any marriage.
Although still not legally binding in the UK, prenuptial agreements can carry weight such that the court will give regard to the prenuptial agreement as a factor of how the assets are to be shared fairly. The case of Granatino and Radmacher also set some important ground rules for practitioner’s advising clients on pre-nuptial and post nuptial agreements.
The Supreme Court advised that if entering into a prenuptial agreement the terms must be fair and consideration given to the following:
- The agreement must be freely entered into
- Both parties must understand the implications of the agreement
- The agreement must be fair
- The agreement must be contractually valid
- The agreement must have been made at least 28 days before the wedding
- There should be disclosure about the wider financial circumstances
- Both parties must have received legal advice
- It should not prejudice any children
- Both parties’ needs must be met
For how long do prenuptial agreements last?
A prenuptial agreement will last for the duration of your marriage and will become enforceable upon separation.
Should you wish to discuss any of the above, our legal team would be pleased to assist.