Prenuptial agreements… are they worth it?

By Olivia Diaz September 18, 2017

In recent years, what was once thought to be an American invention aimed at the rich and famous – the prenuptial agreement – has surged in popularity here in the UK. A prenuptial agreement, also known as a pre-partnership agreement where the relationship was a civil partnership, is an agreement made between couples regarding the way in which the separation of assets take place should the relationship come to an end. In other words, it manages discrepancies as to the financial division of assets during the divorce or dissolution of partnership by looking to the agreement drawn up earlier in the relationship.

It is important to note that while prenuptial agreements are not legally binding within the UK, a judge will take the contract into account when overseeing a case. There are two overarching points a judge will look for when determining if the prenuptial agreement should be upheld. These points where set out in the case of Radmacher v Radmacher (formerly Granatino). The two main circumstances of a binding prenuptial agreement are as follow:


1. Both parties need to be fully aware of the consequences of signing the agreement. The parties must both understand the nature and seriousness of the agreement. In many circumstances this means that the contract should be signed with independent legal advice of a solicitor.

2. The agreement must be fair, just and reasonable.  The courts have shown that if an agreement is seriously biased towards one party, leaving them in a financially detrimental situation, then the agreement may not be upheld.


Putting it to practice:

There is a wide spectrum of opinion when it comes to prenuptial agreements. Some couples believe that creating such an agreement is setting the relationship up for failure. On the other hand, other couples believe that it is a reasonable and pragmatic approach to the potential ending of the marriage. They may find comfort in the certainty of what will happen should the relationship end, avoiding conflict, fighting and costly litigation fees. In a world where two out of every five marriages fail, it is a practical step.

There are several points a couple must take into account should they wish to create a legally binding prenuptial document. While there are still no ‘black or white’ rules surrounding prenuptial documents, courts have exercised certainty in the following principles:

  1. Couples must both seek independent legal advice before they enter into such agreement. This is to ensure they are both making an autonomous decision when exercising their consent to sign. This advice needs to be ‘enough for the economically weaker party to appreciate what he/she is giving up’ when signing the agreement.
  2. When drawing up such an agreement, the couple need to disclose all assets and the entirety of their financial circumstances. This needs to be what each couple had before the marriage as well as what each couple brought to the marriage.
  3. Some time and care should be given to drawing up the agreement. The agreement should be signed at least 21 days before the wedding. Neither party should be presented with a prenuptial agreement on the cusp of their wedding.
  4. Finally, it is important to note that the courts place an emphasis on fairness and division of assets on a ‘necessity’ basis. When drawing up such an agreement, couples need to ensure there is some sense of fairness in the division of assets within the agreement. This fairness need not be an equal division, but should provide that their assets should be divided in such a way that both parties has a ‘necessary’ amount of assets. The parties should specifically consider how children will be provided for on a separation/divorce

Gifted property

It is a common occurrence in today’s society that parents help towards purchasing their son or daughters home, either partially or entirely. This may become complicated when a spouse or partner is involved. If the financial contribution towards the home is gifted, then a parent, and their child, may lose that property should the couple’s relationship come to an end. Therefore, a prenuptial agreement can be used as a useful tool to preserve family and inherited money along with a range of other legal documents such as a family trust or a will.

Writing up a prenuptial agreement can be a challenging process. For further clarification and to discuss how a prenuptial agreement could help to protect your assets, please contact Anna Taylor on 0121 693 2222.

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