If your future spouse has significant personal or business debts, you may be concerned that marriage could expose your company, inheritance, property or other wealth. A carefully prepared pre-nuptial agreement can reduce that risk by recording responsibility for debts, setting rules for joint liabilities and identifying assets that you intend to keep separate. However, it cannot remove your partner’s debts, restrict the rights of creditors or prevent the court from exercising its powers on divorce.

Who is responsible for debt after marriage?

Simply getting married does not usually make you personally responsible for a loan, credit card balance or other borrowing held solely in your spouse’s name. Responsibility generally remains with the person who entered into the agreement. However, you may be liable if you borrow jointly, guarantee your partner’s obligations, offer your property as security or assume liability through a business structure. Whilst a pre-nup can govern arrangements between you and your partner; it cannot prevent a lender or other third party from enforcing existing rights against you.

How will debt be treated on divorce?

When deciding financial arrangements on divorce, the court applies section 25 of the Matrimonial Causes Act 1973. It considers all the circumstances of the case, including each person’s resources, financial needs, obligations and responsibilities. An individual debt may reduce the assets available for division between a separating couple, even if only one spouse is contractually liable for it, however there is no automatic rule that a liability will be shared equally. The court may consider when and why the debt arose, whether the family benefited (i.e. was it a ‘matrimonial debt’), and whether it is genuine and enforceable. Borrowing used to meet family expenses may be treated differently from undisclosed or reckless spending by one spouse, although every case turns on its own facts.

What protection can a pre-nup provide?

Pre-nups are not automatically binding in England and Wales, and they cannot exclude the court’s jurisdiction upon divorce. However, in Radmacher v Granatino [2010] UKSC 42, the Supreme Court said that the court should give effect to an agreement freely entered into by both parties, with a full understanding of its implications, unless it would be unfair to do so in the circumstances at the time of divorce. With that in mind, a pre-nuptial agreement is likely to carry more weight where both parties receive independent legal advice, provide material financial disclosure as to their financial circumstances at the time the pre-nup is entered into, understand the proposed terms and have sufficient time to consider them without pressure.

A pre-nup can record existing liabilities, confirm who should be responsible for future personal borrowing and set clear expectations for joint funds. It can also explain how joint debts should be repaid on separation and identify assets that the couple intend to keep separate both during the marriage and if they separate in the future. This can provide persuasive evidence of your shared intentions from the outset of your marriage and reduce uncertainty in the event of divorce. However, the intentions you express in a pre-nup will not release either person from liability to a creditor.

Practical safeguards for business owners and wealthy families

If you own a company or partnership interest, expect to receive an inheritance or hold wealth through family investment structures, the risk is rarely limited to a credit card or personal loan. Guarantees, secured borrowing, directors’ loans and liabilities connected with a business may create more complex exposure. Your pre-nup should therefore complement your wider legal and financial arrangements. Before marriage, consider:

• obtaining credit reports and a complete schedule of debts, guarantees and security;
• keeping inherited or pre-marital assets clearly documented and avoiding unnecessary mingling of assets;
• not giving a personal guarantee or charging property without separate advice; and
• agreeing controls for joint borrowing and significant expenditure;

If you are considering a pre-nup, timing is important. Current family law guidance in relation to pre-nups emphasises the need to understand each person’s objectives and the dynamics of the relationship, maintain full records, obtain independent advice and provide appropriate financial disclosure. Beginning the process well before the wedding gives both parties a proper opportunity to take advice, negotiate and reflect.

You should consider taking advice before marriage if your partner has substantial or unclear debts, if you are being asked to guarantee borrowing, or if your assets include a business, inheritance, trust interest or property that you wish to protect. The earlier the position is reviewed, the more opportunity there is to obtain disclosure, negotiate appropriate terms and coordinate the agreement with your wider arrangements.

Is a pre-nup worthwhile?

For many couples with substantial or complex assets, a pre-nup is a worthwhile safeguard. It cannot guarantee complete protection from every financial consequence of a partner’s debt, but it can strengthen your position by defining responsibility, protecting agreed categories of wealth and reducing the scope for a costly dispute. It is most effective when supported by careful financial arrangements during the marriage and specialist advice on any business, trust, tax or cross-border issues.

If you are concerned about a future spouse’s personal or business borrowing, taking advice early can help you understand the practical risks before you marry. JMW’s pre-nuptial agreement lawyers can review the liabilities, identify where your business, inheritance, or other assets may be exposed, and prepare an agreement tailored to the way your wealth is held. The aim is to help you enter marriage with clarity, appropriate protection and a fair plan for the future.