Although nobody enters a marriage intending to get divorced, it is fair to say that we live in a world where separation is common.
So, it is understandable that many couples prefer to prepare for the possibility of a relationship breakdown and want to provide for certainty if a future separation occurs. A prenuptial agreement (often called a pre-nup) can help with this. No longer considered to be just for celebrities, prenuptials are fast becoming a normal part of preparing for marriage.
A prenuptial contract is a formal written agreement created before marriage that details how certain assets are to be treated should the marriage terminate. It can cover a range of assets, including those acquired pre-marriage or inherited such as property, savings, shares and other belongings. Once married, these assets, if reinvested or changed in any way, could become matrimonial assets and be considered to belong to both parties unless specifically protected. A prenuptial agreement can be as simple as stating that everything will be divided 50/50, or it can be more complex and ring-fence certain assets.
If you are married and think a prenuptial agreement should have been entered into, it is not too late. It is possible to enter into an agreement after your marriage, known as a “post-nuptial agreement”.
- Explain how such agreements work.
- Prepare and draft the agreement or revise an agreement that has already been drafted for you.
- Protect your assets to help avoid lengthy court battles, should you separate.
- Understand what impact there might be if one of you lives or spends substantial time in another country during your marriage.
Frequently Asked Questions
What is a Prenuptial Agreement?
Put shortly, a pre-nup is a formal, written agreement between a couple signed in advance of their marriage which makes provision for the division of that couple’s assets and income in the event of divorce.
How do I ask my partner about entering into a Prenuptial Agreement?
Such agreements may seem unromantic and clients are often worried about raising such a sensitive topic with their partner. It is difficult to imagine a dinner date with your fiancé beginning with “Honey, I want a pre-nup!”
This may be perceived as dooming the marriage to fail before it has begun. In our view, however, this is far from the case. One way to describe a pre-nup is to liken it to an insurance policy. You don’t intend to have an emergency, but it is responsible to have the policy in place just in case, particularly if you are safeguarding substantial assets.
It may also be said that a couple who are able to sit down and talk openly about their finances will build a strong and trusting foundation to their marriage.
What are the benefits of having a Prenuptial Agreement in place?
Entering into a pre-nup prior to marriage provides clarity about how your assets should be divided in the event of a divorce, reducing the risk of complex and acrimonious legal proceedings and saving both time and money.
A pre-nup is particularly advantageous where one of the following applies:
- There are children from a previous relationship to be protected in the event of a separation.
- Substantial assets have been accumulated prior to marriage. This could be savings, investments, pension interests or perhaps sums contributed towards a property.
- There is, or there is expected to be, inherited wealth received by one or both parties.
- One or both parties has a private and/or family-owned business.
What should be included within a Prenuptial Agreement?
Each agreement is tailored to a couple’s particular circumstances, however, it will usually contain details of each party’s assets, and provide how they are to be dealt with in the event of a divorce.
Are Prenuptial Agreements legally binding?
The short answer is yes, provided it has been properly entered into.
In Scotland, we have specific legislation which provides that two parties can enter into a legally binding agreement about their financial position on divorce unless it is found to have been unfair or unreasonable at the time it was entered into.
In what circumstances should a Prenuptial Agreement be prepared?
Following on from the above question, if a Court is looking at a pre-nup to consider whether it was fair and reasonable at the time it was entered into, and therefore legally binding, its primary focus will be upon the circumstances surrounding the preparation and signing of the agreement.
Important factors the Court will take into account include the following:
- Independent legal advice: Both parties should be allowed sufficient time and opportunity to take independent legal advice on the terms of the agreement. We would therefore recommend that the subject of a pre-nup is brought up well in advance of, and ideally at least two months prior to, the wedding.
- Full disclosure of assets: Each party must be transparent about their assets at the date of signing the pre-nup. Failure to disclose assets or hiding their true value could result in the agreement being deemed unfair.
- Duress: Neither party should be pressurised into signing a pre-nup. If your partner refuses to sign, then it is for you to consider whether you wish to get married without an agreement in place. If an agreement is signed under duress or threat, it is more likely to be overturned by a Court.
Do lawyers need to be involved?
The terms of a Prenuptial Agreement will have significant legal consequences for a couple should they decide to separate. The law in this area is very complex and we would therefore always recommend that each party be represented by their own independent solicitor in order to be properly advised about the consequences of signing, and the legal rights they may be surrendering as a result.
Furthermore, we outlined in question five the various circumstances in which the terms of a pre-nup might be overturned by the Court. Prenuptial agreement solicitors are aware of these issues and will therefore be able to guide you through the process.
What are the costs?
Costs can range from £1,500 upwards depending on the complexity of the financial arrangements and the length of negotiations.