If you are planning to get married or enter into civil partnership, and are looking to achieve a degree of certainty in the event you and your partner separate, a prenuptial or pre-partnership agreement may be a wise investment of time and money.
Our large, specialist matrimonial finance team is accustomed to negotiating, drafting and advising upon sophisticated agreements that are sensitive to each couple’s unique circumstances.
To speak to a member of the team for more information on prenuptial or pre-partnership agreements simply call us on 0345 872 6666, or fill in our online enquiry form and let us know a convenient time to contact you.
What is a Prenuptial Agreement?
A prenuptial agreement, or prenup, is a document signed by a couple before marriage that sets out what will happen to their property, assets and income in the event their marriage ends.
An agreement can also be made in advance of a civil partnership ceremony. These are often referred to as pre-partnership agreements. The relevant legal issues are the same.
The family court is increasingly upholding prenuptial agreements when making decisions in financial disputes arising from divorce and civil partnership dissolution. The court does, however, reserve the right to step in and put a different financial settlement in place if the situation requires it.
The best statement on the legal position is taken from the landmark case of Radmacher v Granatino:
“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 their agreement.”
For an introduction to prenuptial agreements, take a look at our guide where we explore some of the key concepts behind prenuptial agreements to help you consider whether they should form part of your wealth planning strategy.
Content of the Agreement
People have many reasons for wanting a prenuptial or pre-partnership agreement, but some of the most common issues covered include:
- How a particular asset should be dealt with in case of divorce
- If one party is very wealthy and would probably be called upon to support the other, what that support would mean in practice - a lump sum, a trust, provision of property, etc.
- An agreement not to share out a particular asset, for example, a property or business owned prior to the relationship
- If the parties have connections with overseas countries, which country’s courts will deal with their divorce and related financial matters
- Agreement as to how inherited or gifted wealth should be treated in the event of a divorce
The court has the discretion to put in place different financial arrangements from those set out in the agreement if they are unfair. However, a well-drafted agreement is likely to be upheld by the court.
JMW Solicitors has created a guide to prenuptial agreements, explaining what you need to know about creating one here.
Making a Prenuptial Agreement in the UK
If you are engaged and are considering entering into a prenuptial agreement, it is never too early to start planning, particularly when there are complex assets involved. It can take some time to gather the necessary information, consider the options and negotiate the terms of the agreement.
We would recommend that taking advice on the possibility of a prenuptial agreement should form an early part of your plans. It is important that the agreement is signed well in advance of the wedding/civil partnership ceremony. We would advise at least one month before.
In order to give a prenuptial agreement the best possible chance of being recognised by the courts, certain safeguards should be met. These include:
- Both parties receiving independent legal advice prior to entering into the agreement
- A full and frank disclosure of each party’s finances, including assets, liabilities, income and pensions
- Completing the agreement within a reasonable length of time before the wedding or civil partnership ceremony
- Making a realistic and reasonably fair agreement
This is a complex and constantly evolving area of the law. If you are considering entering into a prenuptial agreement, early planning is crucial to ensure that the process is as smooth and stress-free as possible, leaving you free to concentrate on planning your wedding or civil partnership ceremony.
Making an International Prenuptial Agreement
Different countries have different laws related to prenuptial agreements, which can cause problems if you move to another country or move to England and Wales from abroad. Whether a prenuptial agreement remains valid in your new country of residence is determined by the circumstances of the case, the terms of agreement and - most importantly - the relevant state or territory’s law.
These are some of the different types of arrangement in operation around the world:
- Prenuptial agreements are not recognised at all
- Prenuptial agreements have been recognised for hundreds of years and not uncommon
- Couples are free to enter into prenuptial agreements but the courts can step in to prevent substantial unfairness or hardship
- As in England and Wales, prenuptial agreements are very detailed and tailored to the individual wishes of the small number of couples that enter into them
- Rather than entering into a detailed agreement, in some places, couples can simply choose whether their assets will be subject to a community of property regime (shared) or a separation of property regime (retained)
- Each time one member of a married couple purchases property in some countries, they can elect whether it will be treated as separate property or part of the matrimonial ‘pot’
Situations can get complicated when a couple has a prenuptial or other marital agreement from one country and move to another with different laws and traditions. Lots of cases have gone through the courts in England and Wales where a divorcing couple with an overseas prenuptial agreement have disagreed over whether or not it should be followed. We have learnt some guiding principles from cases like this:
When couples have had full financial disclosure and individual legal advice on the terms of the agreement, it is more likely to be upheld
Even if an agreement is not upheld in full, its existence could influence the court to award a lower financial settlement than they would if there had been no agreement
Sometimes prenuptial agreements can influence not only the financial settlement but also which country’s courts will deal with the divorce proceedings
Some terms in certain agreements can restrict the court’s ability to deal with all aspects of a financial settlement
All financial settlements on divorce have to be approved by the court in this country, even where the parties have fully agreed on the terms and/or there is a prenuptial agreement. In practice, cases, where there is complete agreement, are almost always dealt with by a judge as a paperwork exercise without the need for anyone to appear in court.
What is a Postnuptial Agreement?
A postnuptial agreement, also referred to as a postnup, post-marital or post-partnership agreement, is a document setting out what will happen to a couple’s finances in the event they separate. This is entered into after their marriage or civil partnership.
Many people entering into a prenuptial agreement will revisit it at regular intervals and confirm their agreement in the form of a postnuptial agreement. The legal framework is very similar in that they are likely to be adhered to by the courts upon a divorce, provided certain requirements are met.
A postnuptial agreement could be a comprehensive agreement resolving all relevant financial matters in the event of divorce or civil partnership dissolution, or be drawn up with the aim of protecting a specific asset, such as a new business or property co-owned with a third party.
When should I make a prenuptial agreement?
To give a prenup the best possible chance of being upheld, it should be completed in a reasonable amount of time before the marriage or civil partnership ceremony. There is no statutory time period and the case law does not give us a timetable.
Way back in 1998, the Home Office published a consultation document called ‘Supporting Families’. Amongst other things, this document set out some ideas for future legislation on prenuptial agreements, which never actually made it into law. It suggested that a prenuptial agreement should be signed 21 days before the ceremony for it to be legally binding. This is not the law, but this timescale has been cited as an example of best practice.
We would suggest that if you wish to have a prenuptial agreement, this should form an early part of the wedding or civil partnership ceremony planning. Even a relatively simple agreement can take some time to put together, and it is preferable to get the prenup completed and filed away several weeks (ideally months) before the big day.
The sooner you get on with considering your agreement, the better. However, if you do find yourself running short of time, talk to a solicitor as soon as you can because there may still be time to put something in place ahead of the wedding, which might be strengthened by a postnup prepared after the wedding.
Do I have to tell my partner about my financial situation if we are having a prenuptial agreement?
It is good practice for there to be mutual financial disclosure before entering into a prenuptial agreement. Without this, it is likely that the agreement would not be upheld by the court if any disputes arise in the future.
The exchange of financial disclosure should form part of the process of formulating the agreement to ensure that both parties are going into it with their eyes open and - to borrow a phrase from the Supreme Court - “with a full appreciation of its implications”.
Can we use the same solicitor to advise us about a prenuptial agreement?
The same solicitor cannot act for both of you because this would cause a conflict of interest. Even if you are agreed on the terms of the prenuptial agreement, these terms will potentially affect the two of you in different ways, so you need separate advice.
Common practice is for one party’s solicitor to draft the agreement, having advised that party on its legal implications, and for the other party’s solicitor to review the draft, advise their client on what it might mean for them and suggest any appropriate revisions.
Who benefits from a prenuptial agreement?
Anyone can enter into a prenuptial or pre-partnership agreement. It is a very personal decision and some people value having a document that sets out what they will do, in financial terms, if they split up in the future, regardless of their circumstances.
Agreements are potentially of greatest importance for couples where there is a difference between their respective financial positions going into the relationship. This would include situations where there has been or is likely to be a substantial inheritance on either side.
Alternatively, one party may have built up a business before getting married. Sometimes couples marrying later in life, maybe for a second time, will want to enter into a prenuptial agreement to help protect the financial position of children from earlier relationships.
Another reason for entering into a prenup is as a sort of ‘will’. This does not mean a couple fears or suspects that their marriage/civil partnership will not last; it just means that if the marriage does come to an end, they are able to sort things out with reference to an agreement drawn up at a less stressful, possibly more rational time in their lives.
How can I make sure a prenuptial agreement is upheld in another country?
At the point of signing the agreement, make sure you take legal advice and ask your lawyer what (if anything) can be done to make clear that you intend to be held to the agreement even if you relocate abroad.
If you are planning to relocate to England and Wales after marrying, ask your lawyer to consider whether advice should be sought from an English solicitor or barrister before finalising the agreement. If the agreement was completed before you considered relocating here, consult a solicitor in this country about how the agreement may be treated here.
You may want to consider entering into an English post-nuptial agreement to confirm the terms of any agreement entered into abroad (so far as this is possible under English law).
If you are already separating and have an overseas prenuptial agreement, make sure you take legal advice as soon as possible to find out whether you should be trying to argue for the divorce to be dealt with in another country.