What is a pre-nuptial agreement?
A pre-nuptial agreement is an agreement made by a couple planning to marry. The agreement sets out what the parties would like to happen to their assets in the event of a divorce or separation and it becomes effective once the parties have entered into a valid marriage.
Why consider a pre-nuptial agreement?
There are many reasons why couples might wish to enter into pre-nuptial agreements. They can help to reduce the stress and uncertainty in the event of future separation, and they can provide the couple with greater control over how their assets are divided.
Pre-nuptial agreements are increasingly common amongst couples who have children from previous relationships who wish to ensure that their children are provided for in the event of separation.
Couples may also wish to protect an inheritance that they have received, or are likely to receive, to ensure the inheritance is retained by them or within their family.
Are pre-nuptial agreements binding?
Pre-nuptial agreements made in England and Wales are not strictly binding, however, it is a factor which the court can take into account when deciding upon the division of assets upon divorce or dissolution of a civil partnership. If the court is satisfied the agreement is fair it is likely to be upheld by the court, and it can be a decisive factor.
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 it would not be fair to hold the parties to their agreement.
For the courts to consider the agreement to be fair, both parties should seek independent legal advice and there should be full financial disclosure, which means both parties should provide information on their finances so that the terms of the agreement can be properly considered. It is important the agreement meets both parties’ basic needs. If it does not, the court is less likely to consider the agreement is fair and could depart from the terms of the agreement.
It is important to note pre-nuptial agreements may be binding in other countries so advice from a lawyer in that jurisdiction should be sought if the couple are likely to live abroad in the future, or in the event there is some international element to their relationship.
What should a pre-nuptial agreement include?
The agreement will focus on what happens to the property and assets each party brought into the marriage as well as property and assets acquired during the marriage. This includes the family home and other properties, money held in accounts, pensions and personal items. The agreement will also need to consider arrangements for any children the parties have, or may have, in the future. The agreement may state that there is provision for it to be reviewed if the parties have children in the future as the circumstances will have changed. The needs of the children will be the courts’ first consideration in the event of divorce or dissolution, and it will therefore be important that the agreement adequately deals with their needs. If the agreement does not meet the children’s needs, the court is likely to consider it unfair and it might not be upheld or upheld in full.
When should pre-nuptial agreements be entered into?
Pre-nuptial agreements should be finalised with sufficient time before the wedding, usually no later than 21 days prior to the ceremony. It is important that neither party feels pressured in to entering into the agreement and has enough time to consider the terms of the agreement in full and to take legal advice if they wish to do so. It can take time for both parties to seek independent legal advice, obtain financial disclosure, negotiate the terms and draft the agreement and it is therefore crucial that there is sufficient time to do this.
For any further information or advice about pre-nuptial agreements please contact our Carol Chrisfield on 0300 373 7867 or [email protected]