A prenuptial agreement is a financial arrangement drawn up before a marriage that sets out how items such as property and capital are regulated in the event the marriage breaks down. Our expert solicitors at Josiah-Lake Gardiner have considerable experience in the area of prenuptial agreements. We will listen to your requirements and help you in relation to both preparing and completing a tailored prenuptial agreement.
To book an initial consultation with our expert prenuptial agreement solicitors, simply call 020 3709 8975 or complete our online enquiry form.
What is a Prenuptial Agreement?
A pre-marital/prenuptial or pre-civil partnership registration agreement (otherwise referred to colloquially as a prenup!) is a formal written agreement between two partners entered into prior to their marriage or civil partnership. It typically sets out what has been agreed between a couple should happen with regard to the ownership of financial assets and property in the event of the breakdown of their marriage/civil partnership.
It is often said that prenups are not very romantic and that they are evidence of incompatibility or of a lack of trust by the party wishing to enter into one in the other. Not so. A prenuptial agreement should be seen as no more than insurance in the same way that someone might take out life assurance or health insurance. You take it out hoping never to have to rely on it but if you do it is there. The same can be said of a prenup. Once it is signed it can be put away in a drawer and never thought of again.
If, however, the marriage or civil partnership does breakdown, then it is a clear marker as to what the parties themselves considered to be fair in terms of the division or retention of their assets in the event such relationship breakdown. With ‘divorce’ rates as high as they are (with roughly 2 in 5 marriages ending in divorce and 1 in 8 civil partnerships entered into since December 2005 having been dissolved), it is not unromantic, but simple realism.
What are the Benefits of a Prenuptial Agreement?
Prenups can provide certainty. They are a helpful starting point when looking at the appropriate division of assets on divorce or dissolution. They can be evidence of what each ‘in happier times’ considered would be fair should their relationship end. Whilst the overwhelming majority of those entering into a marriage or a civil partnership do so in good faith, with all the right intentions on the basis that it will be a lifelong commitment, there is always a chance that the relationship will falter and be brought to an end by divorce or dissolution.
One or both of the parties may have heard horror stories from friends or relatives or read about cases in the news about bitter break-ups and want to avoid acrimonious legal proceedings. They may also feel more comfortable knowing that if things do go wrong they have an agreement setting out how financial matters between them will be dealt with (which they agreed to and which they at that time considered to be both fair and reasonable) rather than trying to negotiate when they are also trying to cope with the breakdown of their relationship and dealing with possible feelings of anger, rejection, failure, resentment and upset. If marrying or entering into a civil partnership for a second (or third) time or later in life, you may have acquired wealth and assets which you would want to protect or preserve for children from an earlier marriage or for family members, it could well make sense to enter into a prenuptial agreement to protect and preserve what is being brought into the marriage. Obviously, when someone enters into a marriage or civil partnership it should be seen as a commitment they are making for life. Many genuinely believe that to be the case.
Divorce/dissolution is not something that is rarely even contemplated as if it was why would the parties choose to marry anyway? The fact is though that not everyone gets their happy ending and ‘happy ever after’ has long since been confined (for the most part) to fairy tales! Marriages and civil partnerships are hard and relationships take work. Some marriages stand the test of time whilst many others do not. Why would it not be appropriate for someone who brought in substantial wealth/assets into the relationship to want to leave it if the worse happened with the bulk of them?
There is certainly an argument that all assets acquired or amassed during the course of the marriage/civil partnership otherwise than by inheritance should be shared and to many that makes perfect sense. Where there are children of the family who need to be provided for again those are good reasons why if a prenup does not deal with these issues that it would not be fair to hold both parties to it.
Thus, you might want to think about getting a prenup for the following reasons:
1. ‘Once bitten, twice shy’ – having survived the financial battering of an earlier divorce/dissolution, you want to have certainty as regards the split of assets should this new relationship fail;
2. You and/or your partner have children from a previous relationship and want to ensure certain assets are preserved for them and or to protect their inheritance rights;
3. You want to protect inherited assets or money;
4. You want to safeguard the disproportionately larger capital assets or substantial savings you have brought into the relationship or your expected future inheritance; and
5. You want some say in how financial issues will be resolved in the event of your relationship breaking down.
What Should be included in a Prenuptial Agreement?
A prenup must contain an inventory of each party’s assets and details of how they are to be dealt with in the event of a divorce or dissolution. It may also set out arrangements for any children, including with whom they will live and the level of financial support the parent with primary care will receive from the other parent. There are certain other requirements that need to be considered when entering into a prenup. This is because should a judge be asked to consider whether the agreement is fair and should be upheld the Court will look at things such as whether:
1. both parties fully understood the terms of it and had enough time to review it before it was signed;
2. both parties have obtained or had the opportunity to obtain separate and independent legal advice on the terms of the agreement;
3. both parties fully understand the agreement they have entered into and have voluntarily chosen to do so;
4. if instructed, the solicitors for both have confirmed that the agreement was entered into freely and voluntarily by the parties with full knowledge of its contents and full agreement of the terms;
5. both parties to the prenup have signed it at least 21 days/three weeks before the wedding/civil partnership registration if at all possible; and
6. both parties have fully disclosed all of their income and assets and have set these out in the schedules attached to the document.
Are Prenuptial Agreements Legally Binding?
Prenups are not legally binding in the UK (as yet). Since the case of Radmacher v Granatino  UKSC 42, prenups are now afforded heavier evidential weight by the courts although they remain just still one of a number of factors that the Court will take into account when determining a financial split on divorce or dissolution.
What has shifted though is that the burden now rests with the party wishing to get out of the prenup to show to the Court why it would be unfair to hold them to its terms. As a result, it is better than not to have a prenup in place as evidence of a shared intention as to how the assets should be split on divorce/dissolution and the terms of any ongoing financial support from one to the other and for any child or children.
On 27 February 2014, the Law Commission in its report to the government recommended that legislation be enacted to introduce “qualifying nuptial agreements”. These would be enforceable contracts, not subject to the scrutiny of the courts, which would enable couples to make binding arrangements about the financial consequences of divorce or dissolution.
In order for an agreement to be a “qualifying” nuptial agreement, however, certain procedural safeguards would have to be met and such an agreement could not be used by the parties to contract out of meeting the financial “needs” of each other and of any children.
So, are we now one step closer to binding pre and post nuptial agreements? Perhaps!
Life Without a Prenuptial Agreement
In such circumstances, reaching a financial settlement will depend largely on what your relationship with your spouse/civil partner is and how complex your respective financial affairs are. You may be dealing with assets held abroad, inherited wealth, complicated pensions and business structures and possibly even assets held in trust from which the family spending is paid. Claims can be made in respect of all of the assets, even those held in the name of only one party and acquired/amassed prior to the marriage/civil partnership.
If agreement cannot be reached out of court, an application will have to be made to the court and the judge dealing with the matter at a final hearing will have the final decision on how the assets are divided. The court strives to decide what the fairest way to divide the assets is but arrangements regarding the children (in terms of their housing) have the highest priority.
The way in which a family’s assets are divided on divorce/dissolution is complex and a whole range of factors are taken into account including:
(a) The income, earning capacity (including any increase in such capacity which it would in the opinion of the court be reasonable to expect a spouse/civil partner to take steps to acquire), property and other financial resources which each spouse/civil partner has or is likely to have in the foreseeable future;
(b) The financial needs, obligations and responsibilities which each spouse/civil partner has or is likely to have in the foreseeable future;
(c) The standard of living enjoyed by the family before the breakdown of the marriage/civil partnership;
(d) The age of each spouse/civil partner and the duration of the marriage/civil partnership (including relevant seamless pre-marriage/registration cohabitation);
(e) Any physical or mental disability of either of the spouses/civil partners;
(f) The contributions which each spouse/civil partner has made or is likely to make in the foreseeable future to the welfare of the family including any contribution by looking after the home or caring for the family;
(g) The conduct of each spouse/civil partner if in the opinion of the court it would be inequitable to disregard such (note though that this does not mean behaviour such as adultery and would need to be of a financial nature);
(h) The value of any benefit (including pension benefits) which the spouse/civil partner will lose the chance to acquiring by reason of the dissolution or annulment of the marriage or civil partnership.
How Much Does a Prenuptial Agreement Cost?
There is really no straightforward answer to this question, as a lot will depend on the amount, nature and location of the assets (some of which may be overseas), the length of time it takes to conclude the agreement, the stance taken by the other party and their solicitors and the particular circumstances of the couple and what they want to achieve by the agreement.
Broadly, a ‘simple’ prenup, involving limited assets all held within this jurisdiction, could cost between £2,000 and £3,000 plus vat. A more complex agreement could cost up to and sometimes more than £10,000 plus vat. At an initial meeting, we would be able to give a more definitive idea of likely costs. The cost is likely though to be a tiny percentage of the overall assets and for the wealthier party the potential benefits of having a prenup will likely outweigh the outlay.
Do I Need a Solicitor For This?
It would certainly help that a prenup is drawn up by a qualified solicitor, as this could well provide evidence that the parties understood what they were entering into and that it represents what each believed as at that time to represent a fair division of assets and a reasonable settlement of financial matters in the event of a divorce or dissolution.
A prenup should be tailored to address the particular circumstances of the couple entering into it. There are many proforma/template prenups doing the rounds on the internet etc but it is important to seek advice from a specialist family solicitor about the prenup and the relevant clauses that need to be contained within it and the issues to be addressed so that it can be as “watertight” as possible so that if necessary it can be given full weight by the Court.
What You Can Expect From Josiah-Lake Gardiner
We, at Josiah-Lake Gardiner, will guide you through the process required to enable you to secure a fair and reasonable agreement. Our expert team of solicitors, with a wealth of experience in drafting and reviewing such agreements, will guide, advise and assist you at every stage of the process, ensuring that your interests are safeguarded and your concerns addressed.
It is not for nothing that Josiah-Lake Gardiner has been named one of the UK’s leading Family Law firms by the independent legal guide The Legal 500 for a number of years. For more information you should make an appointment with one of our expert solicitors to discuss your particular circumstances.