Many people are already very aware of the existence of pre-nuptial agreements due to frequent references to them in television programs, films, and in connection with celebrity divorces. Therefore, many people will already have an idea of what they think a prenuptial agreement is – but are they really the straightforward premarital contracts of the super-rich they’re often portrayed to be?
Put simply, no. In reality, ‘prenups’ are not just reserved for the rich and famous and have, in fact, become an increasingly popular option for many couples in England and Wales, regardless of their income bracket. However, it is also true that prenups have been and will continue to be used by vastly wealthy individuals, such as Rupert Murdoch, to preserve their wealth.
So what are prenuptial agreements, really? How do they work, and are they actually the bulletproof, legally binding trump card they’re frequently portrayed to be in the media?
What is a prenuptial agreement?
A prenuptial agreement is a document signed by a couple before they get married or enter into a civil partnership to determine what will happen to their property, assets, and income in the event that their marriage/civil partnership breaks down.
The content of a prenuptial agreement will be uniquely tailored to a couple’s personal and financial circumstances. It may include how the financially weaker party’s need for housing and income will be met upon separation, which assets are to be classified as ‘non matrimonial’ (meaning they have been acquired prior to or independent of the marriage and should not fall to be shared on divorce), or how inheritance is to be treated if received during the marriage.
Think about this, if you have inherited a vast family estate, should your spouse have equal rights to the profits of that estate, despite it having been kept in your family for generations? This is an example of the types of scenarios that prenuptial agreements can regulate.
Who are prenuptial agreements most suitable for?
A common misconception about prenuptial agreements is that they are only suitable for high-net-worth individuals. A misconception has probably grown from the fact that when we see pre-nuptial agreements in the media, it is often because someone has ‘married up’. The first question many then ask when that marriage ends is “I wonder if they had a prenup?”. Think Jeff Bezos, Bill and Melinda Gates, and Rupert Murdoch and Jerry Hall.
Prenuptial agreements are, in fact, suitable for anyone who wishes to have greater certainty as to how their assets will be dealt with in divorce. We frequently see couples seek advice on prenuptial agreements because they are keen to reduce the risk of a painful and complicated divorce should they decide to separate in the future.
You might especially want a prenuptial agreement if:
- you are remarrying and have assets and/or children from a previous relationship;
- you are an entrepreneur who has built up a substantial business before marriage;
- you have received or expect to receive a large inheritance; or
- you have an interest in family trusts.
Are prenuptial agreements binding?
This is the big question, and the answer might surprise you. Prenuptial agreements are not legally binding in England and Wales. This is contrary to how they are portrayed in the media and is not the answer that couples expect.
However, a properly drafted prenuptial agreement has a strong chance of being upheld by the Family Court, depending on the circumstances surrounding it. This has been the case since the landmark Supreme Court case of Radmacher v. Granatino in 2010, which determined that:
“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless, in the circumstances prevailing, it would not be fair to hold the parties to the agreement.”
The court will therefore likely consider all, or some of the following questions when reviewing a prenup:
- Did the parties obtain independent legal advice and fully understand the implications of the agreement?
- Did the parties enter into the agreement freely?
- Was there sufficient time to consider the agreement prior to the wedding?
- Did the parties exchange financial disclosure, and was there transparency as to their respective resources?
- Does the agreement adequately meet each of the parties needs, i.e., are both parties able to rehouse and are their income needs met?
- Does the agreement meet the needs of any children in the family?
Typically, in circumstances where there is full disclosure, legal advice, and a reasonable level of financial provision made, prenuptial agreements will be upheld by the court. The family court attaches significant weight to pre-nuptial agreements, and it is for the party who seeks to depart from the terms of the agreement to persuade the court why those terms should not be upheld.
How do I obtain a prenuptial agreement?
Prenuptial agreements are not straightforward, and each agreement should be carefully considered and individually drafted. If you want your prenuptial agreement to be upheld, it is crucial that it be entered into under the right circumstances and with the benefit of legal advice.
It is highly recommended that both parties entering into an agreement obtain independent legal advice from specialist family lawyers, giving the agreement the best possible chance of being upheld should the marriage not work out.
While prenuptial agreements may not be for everyone, they serve as valuable legal tools that enable couples to have open conversations abouttheir financial expectations and responsibilities. By clearly defining the division of assets and potential spousal support, prenuptial agreements provide security and peace of mind for both parties.
Understanding the purpose, benefits, considerations, and potential misconceptions surrounding prenuptial agreements is crucial for any couple considering marriage or a civil partnership. It is essential to approach the topic with sensitivity, open communication, and a willingness to seek independent legal advice to ensure fairness and protect each person’s interests.
Ultimately, a prenuptial agreement can be seen as a practical step towards building a strong foundation for a lasting and secure union, where both parties can focus on love, trust, and shared goals, knowing that their financial matters have been thoughtfully addressed.