Many couples now enter into a prenuptial agreement that sets out how their assets are dealt with if their relationship breaks down.
Should I make a prenuptial agreement? Prenuptial and postnuptial agreements are especially popular with people who marry later in life, if they have children from a previous relationship, or where there is inherited wealth or business assets they are bringing to the marriage and which they want to be ring-fenced. Having a prenuptial agreement in place can bring clarity and peace of mind.
Is a prenuptial agreement legally binding? Although these types of agreement are not strictly legally binding yet in the UK (because the UK courts retain a wide discretion in determining financial settlements on divorce), if properly drafted using the guidance of case law, they are likely to be persuasive.
A prenuptial agreement is an agreement entered into by a couple before they marry or register a civil partnership. They are not strictly legally binding in the UK, however the courts are increasingly giving weight to them if the agreement was signed at least 21 days before the wedding, it was entered into freely after having taken independent legal advice and you have exchanged financial disclosure. In some cases, the court may not give effect to the agreement if the current circumstances would make it unfair.
In the event of a divorce without a prenuptial agreement in place, the starting point for a division of assets will be 50/50 taking into account the parties respective income and housing needs with the needs of any minor children to be given priority. You should consider a prenuptial agreement if you have children from a previous relationship and wish to protect their inheritance, if you will be bringing assets or property to the marriage, you earn significantly more than your partner, you own a business, you wish to protect a future inheritance, or if one party has significant debts accrued before the marriage. We can tailor the agreement to your specific circumstances so please contact us for further information and advice.
It should set out ownership of all property and business assets, savings, investments, personal belongings and how they should be divided in the event of marriage breakdown. It can cover how property and pensions will be divided, whether maintenance will be paid by one spouse to another and maintenance for any children.
You should start the process at least six months before the wedding or earlier. You should ensure that you both have sufficient time to seek independent legal advice and exchange financial disclosure. Quite often the agreement will go through several drafts and so it is important that you give yourself sufficient time to review it to ensure that it covers everything. The agreement should be signed at least 21 days before the marriage.
A postnuptial agreement is an agreement entered into if you are already married, detailing how your assets will be split if you were to divorce or legally separate. You may want to consider having one in place if you have received a large inheritance during the marriage or have been through difficulties and want to protect your position in the event of a divorce. A postnuptial agreement can also record that in the event of a divorce you will seek to ask the court to approve a consent order on the terms of the postnuptial agreement. Like prenuptial agreements, postnuptial agreements are not strictly legally binding but will be taken into account by the courts if entered into freely and voluntarily after taking independent legal advice and there has been full financial disclosure.