What is a Prenuptial agreement?
A prenuptial agreement is a formal written contract entered into by two people who intend to marry or enter into a civil partnership.
The agreement details all assets currently owned by each party and sets out what is intended to happen to those assets if the marriage was ever to breakdown. They can also detail intentions in relation to any anticipated assets within the marriage (e.g. Inheritance).
Admittedly a prenuptial agreement is not the most romantic topic to be discussing when preparing for your big day, but they can help clarify the financial position should the worst happen.
Why would one be needed?
There are a number of reasons to enter into a prenuptial agreement:
• to ring-fence assets an individual already has to ensure that they pass to children from a previous relationship/marriage
• to ensure that a person retains control of their business if the marriage was ever to break down
• to protect long standing family assets e.g. farm, land or other valuable assets
• to safeguard anticipated inheritance
• to make clear that liabilities brought into the marriage will remain the full responsibility of the person who was responsible for accruing the debts.
Are they legally binding?
Technically not. There is, at the moment, no statutory provision which binds the U.K. Courts to apply whatever has been agreed in a prenuptial agreement. However case law makes clear that they are to be given high evidential weight as to the intention of the parties and they will be generally upheld by the Family Courts, unless the terms are seen to be inherently unfair.
In a nutshell, if they are dealt with properly (in line with the Law Commission’s recommendations) and your circumstances have not changed to such a degree that it would be inequitable for the Courts to apply the terms of the agreement, your prenuptial agreement will be upheld.
The Law Commission guidance – what does it say?
The Law Commission have made some key recommendations of formal requirements that they believe should apply before the prenuptial should qualify:
1. the agreement must be contractually valid and enforceable
2. the agreement must be made by deed and signed by both parties
3. the agreement should be made 28 days before the date of the marriage or civil partnership
4. at the time the agreement is formed, both parties must have received disclosure of material information about the other person’s finances; and
5. both parties need to have had independent legal advice (a waiver is not possible).
What happens if there is no prenuptial agreement?
Essentially, any and all assets that are held within the marriage at the time of the breakdown of relationship will be considered as part of the matrimonial pot.
Despite the fact that there are a number of factors that guide the court when considering how best to split the pot, one of the key considerations in each case will be the needs of the parties. To find out more about the approach of the Court in these situations, please refer to our earlier article ‘Divorce: Financial Factors – What do the Courts look at?’ which can be found in our blog history.
In the event that you require further advice in relation to prenuptial agreements, please contact Nia Thomas on 01267 237441. We can offer a 30 minute free consultation and a fixed fee quote for a tailor made prenuptial agreement that will best safeguard your circumstances.