For many, Prenuptial Agreements retain something of a mythical status; people have heard of them and know that they do exist but they are not really sure whether they carry weight or what they actually entail. Quite often, those questions remain unanswered because they are perceived as unromantic and, quite frankly, the proposition of having one is something which many people may shy away from.
The reality is that such agreements, provided certain steps are taken, can give a couple a much greater degree of financial autonomy than they might not otherwise have and they can be a very valuable tool for identifying wealth, protecting it and dramatically reducing the acrimony that many couples face resolving a financial arrangement upon separation. Typically, they would often be used where one party brings a disproportionately higher degree of wealth to a marriage, whether that is through inherited assets or because they have accrued wealth during the course of their life and wish to protect it for their children. A Prenup is a contractual agreement drawn up between a couple, usually with the benefit of legal advice, prior to a marriage setting out what would happen in the event of a future separation.
Do you have any questions about Prenups? Contact us today for your free 30 minute consultation.
Topics to be answered in this article
Why do you need a prenup in a high net-worth marriage?
In England and Wales, the law setting out how assets are treated in the event of divorce is discretionary. Various factors are considered to determine what a fair settlement would be. However, there is a presumption that, certainly after a longer marriage, assets would usually be divided equally, regardless of who contributes what.
Furthermore, the treatment of finances is something which would usually fall to be discussed and either agreed or ordered by a court at the time of the breakdown in the relationship. Resolving financial matters at a time when emotions are running high, particularly if the perception is that the legal principles are unfair, can be very distressing. If the nature of a couple’s asset base is particularly complex, involving higher value assets or complex ownership structures including Trusts, company interests and pensions, this can be a very expensive process which can have implications for the couple involved and for family and friends around them.
A Prenuptial Agreement seeks to avoid some of those issues. It may seem unattractive to have discussions about the implications of any future divorce at a time when other conversations revolve around the marriage but, in truth, it can often be easier to have those discussions at that time rather than at separation when the love in the air may have been replaced by hostility.
Prenup vs Postnup Agreements
A distinction is often drawn between a prenup and a postnup. They are different in the sense that one is an agreement completed before marriage and the other after, but the law no longer draws a distinction between the two. From a practical perspective, it may be preferable for anyone seeking to protect their own financial position to enter into a prenuptial agreement as the motivation for entering into an agreement after marriage is often lessened.
Are prenup agreements legally binding in the UK?
A Prenuptial Agreement is not absolutely binding in England and Wales. The courts always retain a discretion to overrule such agreements either in full or in part to ensure that a fair outcome can be achieved.
However, provided certain safeguards are met and the net impact of any agreement is not manifestly unfair, there is a presumption that any such prenuptial agreement will be upheld.
In short, it is better to have an agreement than not.
How can Goughs help?
We offer specialist advice from Family Lawyers who have many years’ experience of preparing such agreements. We are also very familiar with ways in which a discussion about entering into an agreement can be approached, often working with financial advisers and other members of Goughs’ Private Wealth Sector group.
At Goughs, we are also able to provide independent advice for those who have been asked to enter into an agreement.
For further assistance please do not hesitate to contact Thomas Boyce or Ross Phillips. Thomas is an experienced family law specialist and head of our Family department – he advises a wide range of clients, both married and unmarried, on the implications of relationship breakdown. Ross thrives on obtaining favourable financial settlements for his clients and achieving a fair outcome for parents who may be having difficulties managing childrens’ arrangements with their ex-partners.