Here’s some tips for a loving, long and financially successful marriage!
Pre-Nuptial Agreements
The popularity of Pre-Nuptial Agreements has increased substantially over recent years. Second marriages, marrying later in life and couples living together longer prior to marriage are just a few of the reasons why Pre-Nuptial Agreements have become more well-known and no longer simply for the ‘rich and famous’.
What is a Pre-Nuptial Agreement?
A Pre-Nuptial Agreement is a written Agreement, or Contract, between two partners in readiness of their marriage or civil partnership. The purpose of the Pre-Nuptial Agreement is to set out the respective assets and liabilities of the couple including savings, property, business assets and specify what would happen to the parties’ respective assets should the marriage or civil partnership come to an end in the future.
Pre-Nuptial Agreements are not automatically legally binding in England and Wales. This means that the Court, when dealing with the division of the finances of a marriage, is not bound to uphold the Pre-Nuptial Agreement. However, following the 2010 Supreme Court decision of Radmacher v Granatino where the Court determined “the Court should give effect to Nuptial Agreements that are 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”. Pre-Nuptial Agreements which have been thoughtfully and correctly undertaken will be important evidence for the parties should the marriage end. Entering into a Pre-Nuptial Agreement is therefore an important consideration to make prior to any marriage or civil partnership.
How to make a legal Pre-Nuptial Agreement
Provided the Agreement has been entered into correctly there is every chance that a Court would uphold and give effect to a Prenuptial Agreement. There are a number of requirements that should be met if the Pre-Nuptial Agreement is to be upheld in the future:-
- The Agreement must be freely entered into, it is therefore important that both parties obtain independent legal advice and that no pressure is placed on either party to enter into the Agreement.
- The couple must disclose their assets and liabilities with one another and it is important for this information to be annexed to the Agreement by way of a schedule.
- The Agreement should be signed at least 28 days prior to the marriage or civil partnership and it is therefore important for the couple to look into obtaining independent legal advice at least three months prior to the marriage to ensure that there is sufficient time for them to obtain independent legal advice and exchange financial disclosure.
- Both parties must have a full appreciation of the implications of the Agreement. It is impossible to know what will happen in the future, however the parties will need to give thought as to the effect of the Agreement. For example, if they expect to have children, one party has substantial assets or the probability of receiving inheritance in the future.
Advantages of a Pre-Nuptial Agreement
The main advantage of entering into a Pre-Nuptial Agreement is that it enables a level of certainty in that the couple has the freedom to agree at the outset of the marriage what would happen with the finances of the marriage, and how they would be divided, were the couple to separate or divorce at a later date. This would also avoid the uncertainty upon separation as to what happens with the finances of the marriage thereby avoiding time and stress in the future.
Entering into a Pre-Nuptial Agreement may well save money. Whilst the couple would incur legal fees in respect of the preparation and drafting of the Pre-Nuptial Agreement, this is usually cheaper than the cost of Solicitors contesting financial remedy proceedings in the event of a divorce. Further, it is an opportunity for the couple to agree to “ring-fence” certain assets particularly if they are sentimental to one person, one party has built up substantial assets, or perhaps has, or expects to, receive inheritance. If the parties have thought carefully as to the division of the assets within a Pre-Nuptial Agreement and ensure the needs of both parties and any children would be met, the Court is more likely to uphold these agreements.
A Pre-Nuptial Agreement is particularly useful if one party has an interest in a family or small private business as not only can this protect that party but also the party’s business partner or other shareholder thereby preventing a potential disruption to the business in the event that the marriage breaks down.
Disadvantages of a Pre-Nuptial Agreement
The discussion of financial issues between couples can be one of the most difficult aspects of marriage, and discussions prior to marriage may seem unromantic. However, it is far better for a couple to enter into a Pre-Nuptial Agreement now and avoid the uncertainty of the future.
What is a Post-Nuptial Agreement?
Whilst it is more advantageous for a couple to agree all of the arrangements prior to their marriage, it is possible for a couple to enter into a similar Agreement following their marriage. This is known as a Post-Nuptial Agreement. Again, Post-Nuptial Agreements are not legally binding in England and Wales; however, the Court must give appropriate weight to, and consider, a Post-Nuptial Agreement.
If you are considering entering into a Pre or Post Nuptial Agreement, or would like further advice concerning the potential benefits or detriments of entering into such an Agreement, the Family Team would be pleased to hear from you and can be contacted on 0800 84 94 101 or email enquires@mayowynnebaxer.co.uk.