1. What are they?
Prenuptial agreements are formal agreements entered into by a couple prior to their marriage, the main aim of which is to make provision for how their finances should be distributed should they divorce or separate, rather than leave a court to decide.
2. Are they legally binding?
Although such agreements are enforceable in many countries, as the law currently stands in England and Wales, while the court may take such agreements into account when deciding how to divide assets on a divorce, the court is not bound to follow them. However, over recent years the courts have tended to attach increasing weight to nuptial agreements. The Supreme Court landmark decision of Radmacher -v-Granatino in 2010 confirmed that courts should give effect to a nuptial agreement freely entered into by each party with a full appreciation of its implications unless it would not be fair to do so. Provided certain safeguards and needs are met, parties to a prenuptial agreement are therefore likely to be held to its terms. The Law Commission has also made proposals to give greater legal recognition to prenuptial agreements.
3. What are the advantages of a Prenuptial Agreement?
These agreements can provide some certainty and a reduction in any dispute at the time of any divorce. It cannot be ignored that nearly one out of two marriages end in divorce. Therefore it is sensible to manage and minimise any financial risk as much as possible.
They are particularly useful where the parties have pre-marital assets and future inheritances they wish to protect.
They can help protect your interests in the event of the breakdown of the marriage and can help save the time, costs and animosity so often experienced on a divorce.
4. What are the disadvantages?
Such agreements are often viewed as unromantic and more likely to doom the marriage to failure. However, in some cases the existence of the agreement can lead to a more successful marriage, with the parties knowing that this is for love and not money.
They can take time to negotiate and the couple will each need to give full financial disclosure to the other. Full and frank discussions are required which can illustrate uncomfortable differences in a couple’s expectations and values.
5. What should it contain?
The agreements are tailored to individual circumstances; no one agreement is the same as another. They can deal with the division of both assets and income, or deal only with asset division and leave income to be dealt with at the time of divorce.
6. Do I need legal advice?
Yes. It is recommended that both parties take independent legal advice on the terms of the agreement to increase the likelihood of it being binding.
7. When should they be signed?
The Law Commission’s recommendations are that agreements should be entered into at least 28 days before the wedding to avoid any situations where they may be signed ‘under duress’, so it is important to start the discussions well in advance of the wedding to ensure sufficient time for the agreement to be negotiated, considered and signed.
If you need to come to talk to us about your next steps or guidance on all family issues then we would be happy to discuss this with you. For a free initial 30 minute consultation, please call us on 01252 316316 or contact the Family Team at Wheelers LLP.