We live in an age of divorce where prenuptial and postnuptial agreements are no longer reserved for the rich and famous. But what are they, and do you actually need one?
What is a prenuptial agreement?
A prenuptial agreement or ‘prenup’ is a legal agreement made between two people before they get married. The agreement sets out how the couple wants their existing pre-marital assets to be divided if they split-up. A postnuptial agreement or ‘postnup’ is essentially the same thing, but it’s made after marriage. Postnuptial agreements deal with assets that the couple come into possession of while married.
There’s a subtle but important difference between the two. The easiest way to remember it is that one governs everything before marriage, and the other deals with everything during marriage in the event of the marriage failing.
Nuptials have historically been used by couples where there is an imbalance of family wealth on one side to protect the wealthier side’s assets. But as divorce numbers continue to rise, more and more couples are seeing sense in drafting prenuptial and postnuptial agreements. This is especially true of professionals who derive an income from a portfolio of works, like artists, musicians or even journalists. Prenuptials in particular can ensure in the event of divorce, any royalties continue to be attributed to the creator and not their partner.
Are prenuptial agreements binding?
The short answer is, no, but they can carry legal weight. Judges presiding over financial settlements can choose to take nuptials into account, but they only need to give it ‘appropriate weight’. But what does this mean?
The Supreme Court case of Radmacher v Granatino  UKSC 42, held:
The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement.
If you’re thinking that’s great, but it still doesn’t answer what ‘appropriate weight’ is, bear with me as first we’re going to need to look at what constitutes being ‘fair’. When it comes to divorce financial settlements, judges consider the holy trinity of fairness, which is made up of:
As it says on the tin, this considers what each person needs to maintain a reasonable standard of living depending for them and any children
This considers whether one partner gave up a career in favour of building a family or looking after children, while the other did not
This is what the marriage between the two individuals yielded, which needs to be shared (but not necessarily equally)
If a nuptial agreement deals with assets and income applying the three principles, then it is highly likely the nuptial agreement will be upheld by the court.
Normally, as long as neither side would be left in abject poverty and had taken adequate legal advice before signing the prenuptial agreement, the contents would stand.
To be a qualifying nuptial agreement, the agreement must:
- be contractually valid (the validity requirement)
- it must be executed as a deed (the formation requirement)
- it must be made within 28 days immediately before the wedding or civil ceremony (the time requirement)
- both parties must have received financial disclosure about the other parties’ financial position when entering into the agreement (the disclosure requirement)
- both parties must receive independent legal advice (the advice requirement)
Contents of nuptial agreements
Nuptial agreements must set out which party owns or will own the assets on a future breakdown of the marriage. The nuptial agreement defines:
- “matrimonial property” and
- “non-matrimonial property” or
- “joint property” and
- “separate property”.
Matrimonial property (or joint property) includes assets during the marriage and assets in joint names, such as the family home and joint bank accounts.
Non-matrimonial property (or separate property) usually includes:
- Assets owned before the marriage.
- Inherited assets.
- Gifts received by one party during the marriage.
Nuptial agreements deal with income, like earnings and future earnings as well as interests under any trusts. Nuptial agreements can deal with provision for children, but do not normailly deal with financial provision for any future children. When there is a significant change in circumstances during the marriage, like the birth of children, are dealt with by review of the terms of the agreement; a review clause is inserted into the nuptial agreement which sets out a review and when it should take place. Nuptial agreements do not usually include non-financial arrangements relating to children.
Nuptial agreements can be a minefield for couples intending to marry or who are already married. It is important to get good legal advice early. Britton and Time Solicitors offer a fixed fee initial consultation at £90 plus VAT. Depending on the complexity of the nuptial agreement, prices start from £1,800 plus VAT. If you’d like to speak to one of our Solicitors, then call (01273) 726951 today or click the contact us section of the website.