Couples are increasingly recognising the importance of establishing prenuptial and postnuptial agreements to safeguard their financial interests. Though discussing a prenuptial agreement with your partner may not be the easiest conversation, it can serve as a proactive measure to avoid costly and acrimonious court proceedings in the future. Trust and clear thinking often prevail when decisions are made before emotions run high. Our family law solicitors are on hand to advise on the benefits of creating nuptial agreements and their purpose within the legal system.
What is a Prenuptial Agreement?
A prenuptial agreement (also known as a premarital agreement or a “pre-nup”) is a formal document made by a couple that sets out what will happen with their finances in the unfortunate event that the marriage breaks down. They effectively establish who gets what.
When might you need a Prenuptial Agreement and what can it protect?
Prenuptial agreements have previously been associated with the rich and famous but now couples are far more frequently taking the pragmatic step to enter into such agreements to protect their interests should their marriage break down.
Whilst it may not be an easy topic to discuss with your partner, it can avoid costly, lengthy and acrimonious court proceedings at some future point. Making decisions when there is trust and clear thinking could also be better than when a relationship has broken down and emotions are high.
A prenuptial agreement is still not necessarily for everyone but may be worth at least considering in any of the following situations:
- There is a significant disparity in pre-existing wealth or income.
- One party has been married before and wants to ensure as much certainty as possible should the new relationship break down.
- There is a particular issue to be addressed, for example, how a business interest should be treated or where there has been or is likely to be inherited family wealth.
- There is a need to protect one spouse from the other’s debt.
- One or both parties would want to ensure that children from any previous relationship will not lose any inheritance rights.
- Where it is necessary to meet the requirements of relatives or trustees of family trusts
- Simply for peace of mind where parties want to avoid the costs and stress involved after a separation has occurred.
Are Prenuptial agreements binding?
A 2010 decision in the Supreme Court changed the landscape for prenuptial agreements meaning, in effect, prenuptial agreements are now treated as being binding upon a couple providing certain prerequisites are met, and the terms of the agreement are not fundamentally unfair to the financially less well-off party.
Those prerequisites include ensuring that the parties have a full understanding of the terms of the agreement and have had the benefit of expert legal advice. Both parties must fully disclose all assets and will need to confirm that the agreement is freely entered into.
It is also recommended that any agreement should be signed at least 28 days before the wedding. It is therefore important that couples take advice as early as possible and particularly so if there are overseas assets to consider.
How long does a nuptial agreement last?
In theory, a prenuptial and postnuptial agreement will last indefinitely. In order for a prenuptial agreement to be upheld, however, it must be reasonable and fair. It is therefore important that the agreement includes provision for review in the event of a significant change in circumstances such as the birth of a child or one party becoming unwell or unemployed.
It is also recommended that a review take place broadly every 5 years to ensure any changes in the law are considered and generally, that the prenuptial agreement continues to be fair.
What is a Postnuptial Agreement?
Whilst most people have heard of a prenuptial agreement, less people are familiar with postnuptial agreements. Both agreements are similar in their content and share the intention of setting out the practical and financial arrangements in the event of a future separation.
Postnuptial agreements only differ from prenuptial agreements in that are made at any point after the marriage has taken place.
They can be helpful where a couple has had issues in their marriage which they want to work through or perhaps when subsequent tax planning is being considered by relatives.
Again, providing both parties had independent legal advice, have given full financial disclosure, and the document has been prepared correctly, then the agreement would most likely be upheld by the Court.
As with prenuptial agreements, postnuptial agreements should also allow for reviews when there is a change in circumstances, such as the birth of children, illness or unemployment etc.
Can we use the same family law solicitor for our Prenuptial agreement?
One solicitor cannot advise both parties when considering a prenuptial agreement. It is a requirement that both parties have their own independent legal advice and assistance in negotiating the terms so that the agreement entered into is fair to both.
How much does a Prenuptial agreement cost?
It can be appealing to try and have prenuptial or postnuptial agreements prepared for as little as possible particularly given it’s hoped the agreement will never be called upon. However, if not prepared properly, the consequences can be significant.
A prenuptial agreement is a bespoke document that should be prepared by a family law specialist and therefore the cost can vary given the content and detail of the agreement will be different dependent on the parties’ particular circumstances.
Overall, for most couples, a prenuptial agreement can provide certainty which could save thousands of pounds in the event of a relationship breakdown and the initial cost of a prenuptial agreement often more than compensates for the likely cost of a lengthy or acrimonious divorce.
There is no ‘standard’ solution so it is a good idea to speak to an expert family law specialist with knowledge and understanding of this area and who can effectively advise upon your specific needs.
Nuptial Agreements & Wealth Protection Solicitors
Here at DTM Legal we have a wealth of experience in drafting both prenuptial and postnuptial agreements. Our family law team will be able to sit down and discuss your unique circumstances and draft a bespoke agreement that is flexible enough to accommodate any foreseeable change in circumstances.
If you need any advice with in this area, then please contact one of our Family Team by calling 01244 354835 or email Helen Davies at firstname.lastname@example.org. If you have other concerns relating to family law, visit our Family Law page for more information on our services.