A prenuptial agreement, often referred to as a prenup, can be a good way of ensuring that, if a marriage ends, the divorce can be as smooth as possible with minimal dispute over assets.
What is a prenup?
A prenup is an agreement made by a couple before they enter into marriage setting out what will happen to their property and money in the event that they separate.
It is can be particularly useful in the following situations:
- Where one party has more assets than the other;
- Where one party may inherit money in the future;
- Where one party owns a business;
- Where there are children from a previous relationship to be provided for;
- Where a couple want to set out from the start how they will deal with their finances in the event of a divorce.
A prenup can be an open and honest way to start a marriage, by making sure that a couple understands what the position will be should their marriage break down and that both of them have the peace of mind of knowing that they will have a specified share of their assets.
What can be included in a prenup?
Any financial issues can be covered in a prenup, with the following frequently included:
- What will happen to the family home;
- How money will be divided, to include savings, investments and money in sole and joint accounts;
- What will happen to debts, in particular if a debt was run up by one party;
- Provision for children, to include children from a previous relationship;
- How property will be dealt with, to include property owned by one party before the marriage;
- How any inheritance will be dealt with if this is received by one of the parties during the marriage.
Is a prenup legally binding?
A prenup is not a legally binding document, however if it is correctly drawn up and the proper precautions are taken before it is signed, the court will give weight to the agreement.
The court will look for satisfaction on the following points:
- The agreement has been drawn up by a qualified advocate;
- Both parties have taken independent legal advice before signing;
- Their advocates are able to confirm that the agreement was entered into voluntarily and that each party fully understood the implications of signing;
- The agreement must not negatively affect any children;
- It must provide fairly for each party and meet their financial needs;
- All of the parties’ assets must have been disclosed before the agreement was signed;
- The prenup should have been signed at least 28 days before the marriage took place.
Where all of these points are satisfied, then the court is likely to make an order enforcing the agreement unless it would be unfair to either party to hold them to the agreement.
If one party can show that they were under duress at the time of signing or that they did not properly understand the document, then a prenup might not be upheld. Similarly, if someone would be left in financial difficulties by a prenup, then the court is likely to order a fairer division of assets.
The starting point for a divorce is usually an assumption that assets are jointly owned and should be split equally. To avoid this, it is important that a prenup is carefully drafted. More weight will be given by the court to a well-drawn up, bespoke agreement, created specifically for your situation by a qualified advocate than would be given to a standard or template document.
Can you enter into a prenuptial agreement after marriage?
It is possible to enter into a similar agreement after marriage, in which case it would be referred to as a postnuptial agreement. A prenup can also be reviewed and amended by the parties during the time of their marriage, although the same principles of fairness must still be applied.
If you will be entering into a marriage and you would like to discuss the possibility of a prenup, we would be happy to advise you. Our family law team are friendly and approachable and we will be able to talk you through your options and the best way to provide financial stability for your future and that of your spouse-to-be.
A prenup can help avoid disagreements over money and is an honest and open way to start a life together.