Pre-Nuptial Agreement
Marriage is a significant life event, bringing together two individuals not just emotionally but financially. In recent years, there has been a marked rise in the number of couples opting for pre-nuptial agreements (pre-nups) as a way to safeguard their financial interests. Once considered a tool for the wealthy, pre-nups are now being embraced by a broader range of couples who recognise the importance of clear financial planning before marriage.
They are growing in popularity outside Hollywood, especially where one partner has more wealth than the other, or is more likely to accumulate more. For example, those expecting a large inheritance, land or business owners, couples marrying in later life or for a second time.
There has been a huge rise in pre-nups in the UK since the 1970s – with one in five couples married in 2000 having some form of financial protection in place, according to charity the Marriage Foundation. This compares to 1.5 per cent of couples who had a pre-nup in the 1970s, 5 per cent in the 1980s, and 8 per cent in the 1990s. The research found that female “breadwinners” and couples that both earn were more likely to sign a pre-nup than male breadwinners.
This article explores the growing popularity of pre-nuptial agreements in the UK, their legal standing, benefits, and how they can offer financial security to both partners.
What is a Pre-Nuptial Agreement?
A pre-nuptial agreement is a legally prepared document entered into by two people before marriage. It outlines how assets, property, and financial matters will be handled in the event of divorce or separation. Pre-nups typically cover:
- Division of property, savings, and investments
- Protection of family-owned businesses or inheritance
- Handling of debts and liabilities
- Provisions for children from previous relationships
In England and Wales, pre-nups are not strictly binding; however, they may be given ‘decisive weight’ by a Court if the agreement is deemed to be fair and certain conditions are met.
Why Are More Couples Choosing Pre-Nuptial Agreements?
- Protecting Financial Assets
One of the primary reasons couples opt for a pre-nuptial agreement is to protect financial assets acquired before marriage. This is particularly relevant when one partner has significant savings, owns a business, or has inherited wealth. A pre-nup ensures that these assets remain protected should the marriage end.
- Clarity and Transparency
Money matters can be a sensitive subject in relationships. A pre-nuptial agreement fosters honest discussions about finances before marriage, helping couples set clear expectations about their financial responsibilities and future asset division.
- Safeguarding Family Wealth and Businesses
For individuals who have a family business, a pre-nuptial agreement can protect business assets from becoming subject to division during divorce proceedings. This is particularly crucial for those who want to keep businesses within family ownership.
- Increasing Divorce Rates
With divorce rates remaining significant in the UK, couples are becoming more aware of the importance of financial security. A pre-nuptial agreement offers a safety net, minimising uncertainty and reducing legal disputes if the marriage ends.
- Protecting Children from Previous Relationships
For those entering into a second marriage or with children from previous relationships, a pre-nup can ensure that specific assets are preserved for their children’s future, rather than being subject to division with a new spouse.
Are Pre-Nuptial Agreements Legally Enforceable in the UK?
Pre-nuptial agreements are not automatically legally binding in England and Wales, but their legal standing was significantly strengthened in Radmacher v Granatino (2010). The Supreme Court ruled that pre-nups have “magnetic importance”, and spouses should be held to them unless it can be demonstrated that they are unfair – either in how they were created or the effect they would have.
The success or failure of the pre-nuptial agreement being upheld is almost always about the fairness of the terms in the circumstances of the family at the time of the divorce, which is why it is absolutely essential that parties have expert legal advice on the terms.
To be upheld in court, pre-nups must meet the following conditions:
- Both parties entered into the agreement willingly and without pressure
- Full financial disclosure was made by both parties before signing
- The agreement was fair and does not leave one party in financial hardship
- Both parties received independent legal advice before signing
- The agreement was signed at least 28 days before the wedding
If these criteria are met, courts will generally consider the agreement a significant factor in divorce settlements.
How to Create a Legally Sound Pre-Nuptial Agreement
If you are considering a pre-nuptial agreement, it is important to follow these steps to ensure its enforceability:
- Seek Independent Legal Advice
Each party should have their own solicitor to ensure that their interests are protected. Legal advice helps prevent future claims that one party did not fully understand the agreement.
- Be Transparent About Finances
Both partners must fully disclose their assets, liabilities, and financial circumstances before signing the agreement. Any lack of disclosure can lead to the agreement being challenged in court.
- Ensure Fairness
The agreement should not disproportionately benefit one party over the other. Courts are less likely to uphold an agreement that leaves one spouse in financial hardship.
- Draft the Agreement Well in Advance
Signing the agreement at least 28 days before the wedding allows for proper consideration and avoids claims of undue pressure.
- Review and Update the Agreement
Circumstances change over time, so it is advisable to review the pre-nup periodically, especially if there are significant financial changes, inheritance, or children involved.
Conclusion
As more UK couples recognise the importance of financial planning before marriage, pre-nuptial agreements are becoming increasingly popular. They offer a practical way to protect assets, provide clarity, and reduce the potential for costly legal disputes in the event of divorce.
If you are considering a pre-nuptial agreement, seeking expert legal advice is essential to ensure it is fair, enforceable, and tailored to your financial needs.
For professional guidance on pre-nuptial agreements, contact our team of experienced Cheltenham family law solicitors today. If you require expert guidance to facilitate a financial settlement, do not hesitate to contact us. For more information or to arrange a consultation, please visit our website or contact Lucy Webley or her PA, Linda, directly at 01242 514674. At Midwinters, we are committed to guiding you through life’s legal challenges with professionalism and care. We can provide expert advice to help you plan for the future with confidence.
