A Prenuptial Agreement (often known as a Prenup) is a formal agreement entered into prior to marriage and which sets out the couple’s financial situation, particularly their assets and how their assets will be divided if they divorce or separate.
Often a Prenup is entered into where one or both parties have substantial wealth and wants to protect that wealth if they subsequently separate after they marry.
The Court has discretion to adopt the Prenup if it is fair and reasonable but can just as easily reject the Prenup if it is not.
A Prenup is not legally binding in England and Wales. However, since 2010, following the case of Radmacher v Granatino, which drew significant attention to Prenup agreements, Judges are placing greater weight on Prenups and are likely to take a Prenup into account in the event of a divorce, providing the agreement has been properly entered into.
So what is the criteria that needs to be adopted to encourage the court to give weight to a Prenup?
Both parties to the agreement should receive separate independent legal advice about the Prenup before it is signed.
?Full and frank disclosure must have been made by both parties of their respective financial positions, especially their assets and any other relevant information.
Neither party was coerced or pressurised into signing the Prenup.
?Both parties fully understand the terms and effect of the Agreement.
The Prenup must have been signed/entered into some time before the marriage took place. The consensus is that the Agreement should have been signed at least 6 weeks before the marriage and certainly no less than 21 days before the marriage takes place.
The Prenup should be fair and realistic. It is therefore important to ensure the agreement does not favour one party more than the other, without good reason. If the Court deems the Prenup to be unfair, it is likely to be discarded by the court.
Since the Prenup was entered into, there has been no significant change which would render the agreement unreasonable. For this reason many Prenups will make allowances for the birth of children etc. It is advisable to regularly review the Prenup during the marriage so that it remains fair, especially as circumstances change, i.e. on the birth of a child, receipt of a sizeable inheritance, business ventures etc. Prenups are a complicated area of law so if you are envisaging entering into a Prenup, it is advisable to seek legal advice at the earliest opportunity.
When should I consider a Prenup?
There are a number of situations when a Prenup might be appropriate. Here are some of the common reasons:
- You have previously been divorced or separated from a former partner and want to protect your previous divorce settlement or assets retained/received on separation.
- There are assets and/or property that may be hard to split.
- There are children from a previous relationship and you want to ensure certain assets are preserved for them.
- You want to protect money or assets you have inherited or you may inherit in the future.
- You want to safeguard substantial savings and preserve Trust funds.
- You want some say in how financial issues should be decided in the event of adivorce.
- You may own a business which you would like to retain control of in the event of a
- If the other person has outstanding debt, a Prenup dealing with debts could protect you from being liable for that debt.
? What should be included in a Prenup?
The Prenup should set out both parties’ financial circumstances and how the assets are to be divided if the marriage ends. The agreement can include arrangements for the children on divorce. The children can be children the parties have together as well as children from previous relationships.
? What if I do not have a Prenup?
The court normally starts with an equal division of the assets. If there reasons for a departure from equality (i.e. an equal division) the court will consider the reasons and make such order as it deems fit.
Posted on January 8, 2018