March 28, 2019
We participated in Solicitors Chat on Twitter answering questions about pre-nuptial agreements, what they are and if they are enforceable in England and Wales.
What is a prenuptial agreement and is it a legally valid document in England and Wales?
A pre-nup agreement is a legal agreement made between two individuals before their marriage has taken place. It sets out how the couple wish their assets to be divided between them if they later separate or divorce.
They can detail how the couple currently arrange their finances and how they will arrange their finances during the marriage document. It is not automatically enforceable but becoming increasingly upheld, provided they are entered into voluntary and the parties have had independent legal advice and the agreement is fair.
The parties will need to sign the document at least three weeks prior to the marriage, to avoid any claim that the agreement was made under duress. Pre-nups cannot oust the courts jurisdiction to decide the financial arrangements on divorce. Nevertheless, weight will be attached to the document.
Why should couples consider making a prenuptial agreement?
Pre-nup agreements are designed to bring clarification, certainty and protection to both parties in a marriage.
In relation to the division of marital assets on a marital breakdown, the starting position for the division of these assets is 50/50 between the parties. Although various factors will be taken into consideration, the parties are often left in an unfavourable position.
Additionally, without a pre-nup, creditors (those who are owed money) can go after the marital property even though only one spouse is in debt. You can therefore limit your debt liability through a prenuptial agreement. A further consideration is that individual’s who may have children from a previous relationship can make provisions to ensure that they inherit a proportion of your assets.
Therefore, the crux of a pre-nuptial agreement is to clarify the party’s financial rights and obligations and offers protection from any debts either party may have prior to a marriage. Property interests can also be complex if the marriage is to break down and a pre-nuptial agreement helps to clarify those personal interests, prior to the marriage. Ultimately, such an agreement seeks to alleviate the lengthy and painful divorce process.
How can a solicitor help someone make a prenuptial agreement?
A Solicitor can explain what they are agreeing to, making sure they are freely entering into the agreement and have not done so under duress, fraud, undue influence, mistake or misunderstanding. They can make the party aware of the implications of the agreement and ensure the client is aware of the other’s financial position before signing anything.
What should someone do if they’re asked to sign a prenuptial agreement?
Always take legal advice. Due to the complexities of a pre-nuptial agreement it is advisable that each party seeks separate legal advice.
It is also very important to think carefully about the division of the assets between the parties, as to avoid any initial disputes.
What should be included in a prenuptial agreement?
A pre-nuptial agreement sets out which party owns or will own certain assets on a future breakdown of the marriage. It usually defines “matrimonial property” and “non-matrimonial property” or sometimes referred to as “joint property” and “separate property”.
It can also deal with income, such as treatment of earnings and future earnings and financial provision for existing children, but does not usually attempt to deal with financial provision for any future children.
Significant changes in circumstances during the marriage, including the birth of children, are usually dealt with by review of the terms of the agreement so often a review clause is inserted setting out when a review of the agreement should take place. It does not normally include non-financial arrangements for children.
What happens during a divorce if the couple has a prenuptial agreement?
The court will consider whether to give effect to a pre-nuptial agreement if it is freely entered into by each party with a full appreciation of its implications. It is unlikely that a court will refuse to give effect to an agreement which has been entered into freely, unless in the circumstances, it would seem unjust to hold the parties to the agreement.
The key question for the court will be if the agreement is fair. In order to establish this they will look at (a) if it was entered into freely (b) were the parties aware of the implications of the agreement (c) it must be fair to hold the parties to the agreement in the circumstances prevailing, this will include whether any children have been born.
The longer the marriage the greater the chance it will not be fair, so less likely to be upheld if a young couple starting out with few assets than an couple who have been married previously as each bring significant assets to the marriage. Also would need to look at the needs of the parties.
If you would like more information about pre-nuptial agreements, call us on 0800 158 4147. We can book an appointment with a member of with our experienced Family team at Tayntons.