Post and Prenuptial Agreements
Prenuptial agreements, also known as prenups, are legal documents detailing what would happen to a couples’ assets and children and can further set out future arrangements for the event a couple was to divorce.
Prior to getting married, it’s highly unlikely that the issue of divorce and the burdens it could bring will be at the forefront of you or your partners’ mind.
Unfortunately, with two out of five marriages ending in divorce, it is often necessary to look past the optimism. It is in everyone’s best interest to ensure that if things didn’t work out, there is a plan in place that allows you a clean and amicable separation.
Legal Standing of Prenuptial Agreements in UK Courts
Traditionally, courts in England and Wales have treated prenuptial agreements with some hostility, often dismissing the prior agreements made during a divorce or separation.
However, following the 2010 Supreme Court judgement in the case of Radmacher v Granatino, this position has begun to change.
Ms Radmacher had a predicted net worth of around £100m, and despite her ex-spouse Mr Granatino agreeing not to claim on her wealth in the event of a break-up in their prenuptial agreement, he was awarded £5.85 million from a High Court judge in 2008 following their divorce.
When Ms Radmacher appealed the decision, the court ruled that the terms of their prenuptial agreement should have been taken into account and her appeal was therefore successful.
Consideration for prenuptial agreements
The Supreme Court held that appropriate weight should be given to terms of a pre-nuptial agreement if:
- Each party freely entered into the agreement, and
- Both parties wholly understood the implications of the agreement when it was entered into, and
- It would be fair in the circumstances of the case to uphold the agreement
Following the Supreme Court decision, the Law Commission then took this change one step further by drafting the Nuptial Agreements Bill.
The Nuptial Agreements Bill was set out to reform the existing UK law relating to the legal standing of prenuptial agreements and how assets are divided following a divorce.
Such a reform would mean that valid prenuptial agreements will become legally binding, consequently reducing the court’s power to make financial orders upon a divorcing couple.
Why should couples create a prenuptial agreement?
It is a common misconception that prenuptial agreements only benefit the wealthiest of couples.
This is however untrue. The Law Commission’s report highlights various examples of when a prenuptial agreement would benefit any member of society.
A prenuptial agreement would benefit a couple when:
- Where one party has specific personal assets that they wish to protect, such as inherited wealth or a business
- Couples who have children from a previous relationship or marriage
- Where a party anticipates acquiring wealth after marriage
- Overseas couples from places where pre-nuptial agreements are commonplace
Benefits of having a prenuptial agreement in place
Divorces are often complicated and can sometimes unfortunately even become hostile.
By agreeing at the beginning of the marriage exactly how finances will be shared and divided in the event of a separation, couples can often avoid conflict and hostility down the line.
Divorce negotiations and mediation can become a lengthy process, especially when you can not reach an agreement outside the courts.
A prerequisite to a pre-nuptial agreement is disclosure of financial information of all assets and income.
Couples are therefore made aware of each other’s financial position from the outset of the marriage.
During a divorce financial disclosure is a standard step in the procedure. Avoiding surprises and unforeseen complications will therefore benefit both parties.
As often is the case, where one party gives up their career to care for the family, it can be agreed that that person is entitled to a greater share of assets upon breakdown of the marriage or civil partnership to reflect their loss of earning power.
Without a prenuptial agreement explicitly stating this compensation will be provided after divorce, it is unlikely the court would ever award it.
Without this compensation, the spouse who gave up earnings for the benefit of the family could find themselves in a difficult financial position for years to come.
Potential to Save Money
Drafting a prenuptial agreement is usually significantly less expensive than having to litigate about the distribution of a couple’s finances following a divorce.
Divorce proceedings can become lengthy if children and assets such as property are involved and can easily become very costly.
Protection of Assets
A prenuptial agreement may be especially valuable if a party wishes to “ring-fence” certain assets such as inherited properties or family heirlooms.
If a prenuptial agreement specifically ring-fences certain properties, the court is unlikely to award a share in that property to the other spouse upon divorce.
If either party has children from a previous relationship, a prenuptial agreement can also protect those children by ring-fencing assets that they will be entitled to as part of the agreement.
If either party has significant debts or gains significant debts in the future, a prenuptial agreement can protect the other party’s assets from being used to satisfy those debts.
Even after divorce each spouses’ assets can be at risk in the event of debt if no clear agreements were reached during the divorce.
Protection of Business Partners
Prenuptial agreements can protect any interest a party may have in respect of a small or family private business, thus preventing disruption to the business if the marriage or civil partnership was to breakdown.
The future of prenuptial agreements
It is expected that in the future a greater weight will be placed on qualifying prenuptial agreements and as a result they will subsequently become more popular.
For a qualifying nuptial agreement to be given weight it needs to be drafted in the proper format and qualifying conditions will have had to be met.
- The financial needs of both the parties and children have been met
- It must be validly executed as a deed
- It must have been made more than 28 days before the wedding or civil partnership ceremony
- Both parties to the agreement must have received financial disclosure of material information about the other party’s financial situation when they entered into the agreement
- Both parties must have received legal advice at the time they entered into the agreement
Whilst the above steps may seem like an undesirable and daunting task, the advantages of “the prenup” speak for themselves.
A prenuptial agreement can save you and your partner high divorce costs, bitter court battles and emotional distress for you and your entire family.
Postnuptial agreements are also gaining popularity.
Postnuptial agreements are similar to prenuptial agreements, however these are set out after you and your partner have already gotten married. Couples are opting for postnuptial agreements whilst they are happily married to ensure that all their financial matters are taken care of in case the worst was to happen.
Prenuptial and postnuptial agreements hold the same information and power and only differ in when they are set up.
AWH Solicitors Can Help You
At AWH Solicitors, our experienced family law solicitors can help you draft your post or prenuptial agreement.
This way you and your partner can have complete peace of mind, knowing all your financial arrangements have been already taken care of in the event of a divorce.
To learn more about what we can do for you call today, or request a call back for a time that is more convenient for you.
Our services regarding post and prenuptial agreements will be priced with your specific situation in mind. However, in general, post and prenuptial agreement fees are as follows:
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|General costs from:||£1,000|
Please be aware that cost may differ depending on your personal circumstances.
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