What is a Prenuptial Agreement?
A document that attempts to regulate how two people will deal with their finances, both during the marriage and in the event of a breakdown of that relationship, including in the event of separation and divorce. A Prenuptial Agreement can also regulate what will happen in relation to the parties’ finances upon the death of either party.
What do Prenuptial Agreements cover?
Most commonly Prenuptial Agreements set out how finances will be dealt with.
In part, the Prenuptial Agreement can set out what will happen to any pre-owned property brought to the marriage, for example, one person may have a pre-owned property. It can also regulate what is to happen to any gifts or assets acquired during the marriage by one person, such as an inheritance from a friend or family member. Further, if any joint property is purchased during the marriage, then a Prenuptial Agreement can set out how the equity will be divided upon any separation.
Whilst people do not enter into a marriage thinking it will end, sadly, (although the exact percentage is not known) it is estimated that between 40% and 50% of marriages end in divorce.
Prenuptial Agreements have been said to be “not very romantic”; however, the hope is to never have to rely on them and a Prenuptial Agreement is simply there for practical purposes.
We tend to think of a Prenuptial Agreement like house insurance. You would never want or anticipate a fire at your house but should the worst happen it is there just in case. It is possible that you will not separate and you will never have to rely on the Agreement. Otherwise, should the worst happen, then it is there to protect you.
Unfortunately upon marriage breakdown as matters are inevitably upsetting, a verbal agreement reached whilst two people were still in love (and getting on!) may be reneged on by one (or both!) people once tensions are running high. It is likely to be far better and easier to try to reach an agreement whilst the couple is on good terms – the way it is hoped it will stay! A Prenuptial Agreement is usually far easier to deal with before marriage than trying to reach an agreement after separation, particularly if it is acrimonious.
Are they worth it?
The only way for an individual to protect themselves financially from potential financial claims by the other person upon divorce is to not marry in the first place. The only way, if someone really does want to marry, to attempt to protect the assets from financial claims by the other person upon divorce is by entering into a Prenuptial Agreement.
Prenuptial Agreements are not of themselves legally binding under English Law at the current time. They have grown significantly in weight over the past years and in some cases the courts have declared them to be a magnetic factor in divorce cases. The Courts are becoming more and more open to holding people to contractual agreements including Prenuptial Agreements. Certain conditions have to be fulfilled which are material disclosure, the opportunity of the parties to take legal advice, the Agreement must not be manifestly unfair and if there has been no significant non-disclosure. Further there must be no change of circumstances between the date of marriage and separation but the key factor is that both parties enter into it of their own free without undue influence or pressure and have been informed of the implications. Quite often the Court will uphold a Prenuptial Agreement when determining the financial claims in divorce and will most likely uphold it. This is particularly the case where the parties are married for the second time or third and wish to protect assets for their children. If the circumstances are unlikely to change by any further children being born, generally a Court will uphold it. It is certainly the best form of protection that can be offered at the current time and it is anticipated that in the future such agreements will become legally binding as of right.
Having a Prenuptial Agreement may well persuade the Court to provide the other party with a less generous settlement then they would have received but for the existence of a Prenuptial Agreement.
If an individual wants to protect pre-owned assets or any inheritance or gifts that they may receive during the marriage so that they will be classified as non-marital assets, then entering into a Prenuptial Agreement is worth consideration and is highly recommended.
The future for Prenuptial Agreements
There have been various discussions as to whether Prenuptial Agreements will become legally binding because as has regularly been reported in the press, more and more cases have determined that a party should be held to their Prenuptial Agreement. Only time will tell what will happen next and we wait with eager anticipation to find out.
Contact Lloyd Platt & Co, Award Winning Divorce Solicitors
Protect your assets in the event of separation or divorce by having a prenuptial agreement in place. Contact our award winning solicitors on 020 8343 2998.