You have found the person of your dreams and are ready to tie the knot. We all enter into marriage with the full intention for it to last forever but in the back of your mind, you can’t forget the statistic that on average 50% of marriages end in divorce. Would it not just be good common sense to protect what you are taking into the marriage? Well, that’s exactly where a prenup comes in to help you.
A prenuptial agreement is a contract that both intended spouses will agree and enter into before the marriage takes place. Its purpose is to clearly define the intended long-term ownership of one or both spouses’ assets in the unfortunate circumstance that the marriage should end in divorce. In essence you are setting out who gets what – but there is a little more to it than that.
It is commonly misconceived that prenups are only for the rich and famous, those of high wealth wanting to protect their fortunes. In reality, prenups are not necessarily intended for the very wealthy.
A prenup can serve a vital role for couples where there is a vast disparity in wealth. We must all keep in mind the family courts expectation of “equality” at the time of a financial settlement upon divorce. A lesson taught to us by White v White [2000] UKHL 54 which famously established a presumption of equality upon divorce. This therefore automatically results that; the more affluent spouse stands to lose a lot more than the other. That being the case, can that individual be criticized for wanting to ensure they protect their significant assets that may have taken them years to accumulate, possibly even before they even met their intended?
Further examples when a prenup would come in very useful is where one or both do not have any significant existing wealth prior to marriage but are expecting significant future wealth. This could be increased earnings through career progression, a financial investment or inheritance. A prenup in these circumstances could be used to ringfence those future assets and ensure they remain in the possession of the individual who acquired them in the event of a divorce.
It is becoming more common for people of retirement age to remarry, sometimes for a second or even third time, and they may wish to protect their assets, particularly for those who may be intending to leave any fortunes to children as inheritance. A prenuptial agreement can protect such savings from being divided in a divorce.
Of course, not everyone has significant wealth or assets that they would want to protect. However, this doesn’t necessarily mean a prenuptial agreement is not required. A divorce is always unpredictable, with litigation commonly adding even more acrimony to an already acrimonious situation. Having a prenup can simply be seen as a sensible way to set out future intentions should the marriage come to an end.
At the time of agreeing a financial settlement when going through a divorce, the judge will still have to approve any financial arrangements and ensure the financial requirements of each spouse are met by cross referencing the terms of the agreement to that of the terms set out in the prenup. Please note that it is impossible to fully predict how a judge may rule on a financial settlement, so having a prenuptial agreement is a great way to avoid uncertainty.
Now, here is the big important question ‘is a prenuptial agreement legally binding’?
The way UK law stands at present, prenups are not actually enforceable in family courts. However, it must be borne in mind that family judges in the UK generally give prenuptial agreements significant consideration as part of the financial proceedings connected to divorce. At the end of the day, let’s not forget it’s a legally binding contract. A judge is therefore likely to uphold the agreement providing there are no issues to dispute. In order for a prenuptial agreement to be considered valid and binding, the following must apply.
- It must be evident that it was executed and signed with the correct considerations and precautions along with the relevant legal advice.
- Both parties involved must have sought independent legal advice on the document to ensure it is fair and lawful.
As can be seen, the most important thing of all when entering into a prenup is to be certain of its validity, not just in terms of its drafting and signatures, but to make sure it will be seen as valid by the court later in time. Important points of reference are to make sure it is written up accurately and, over and beyond everything else, it must be fair.
When considering the actual topics to incorporate, this can include; the family home, money, debts, children, property, inheritance or trust as well as many other assets.
Is there such a thing as ‘post-prenups’ I hear you say. To be clear, all prenuptial agreements must be signed before the marriage takes place. If a couple gets married and thereafter decide they want protection similar to that offered by a prenuptial agreement, they can sign a ‘postnuptial agreement’ instead. However, these can be easily overturned by a judge through the course of a divorce proceedings as financial circumstances invariably alter throughout the duration of the marriage in any event.
Another very valid question to ask is ‘can I change my mind afterwards’? The important factor here is whether there is justification for the prenup to be reviewed or amended. This can only be considered if the circumstances of the marriage change. In essence, the terms of the prenup must always remain reasonable and fair in all occasions and circumstances.
Finally, you may be wondering ‘is it really worth it’? The honest and simply answer is yes. The cost of a prenup can vary but when considering that in the UK average marriages can cost £30,000, it just makes good financial sense to make sure that your intended financial arrangements are safeguarded and future proofed.
If you need more help or advice on this topic or Financial Matters please call Jemma on 07534 175310 for advice.
Jemma Wentworth is a family lawyer who offers family law services throughout the UK as a Consultant Legal Executive for Ann McCabe Solicitors.