Prenuptial agreements: Do you need one for your marriage?
Nearly half of married couples who divorce end up separating and divorcing often resulting in unpredictable outcomes.
Is It Necessary to Get a Prenuptial Agreement?
Divorce often brings uncertainty, especially around the division of assets, and a prenuptial agreement allows couples to set out how assets will be divided if they separate or divorce.
For civil partnerships, this is called a pre-registration document.
A prenuptial agreement can also cover how assets will be managed during the marriage, including joint accounts and property ownership. Having a prenuptial agreement can provide clarity and help avoid lengthy disputes about finances if the relationship ends.
It can also set out financial responsibilities during the marriage and clarify ownership of assets if you divorce.
When Are Prenuptial Agreements Used?
Prenuptial agreements are often used where one person has, or is likely to acquire, more assets than the other; they can help protect wealth built up or inherited before marriage.
They may also protect assets owned before marriage, future inheritances, trust funds, or assets intended for children from a previous relationship.
A prenuptial agreement can also help protect against liability for a partner’s debts, maintain business ownership, limit maintenance, and safeguard assets or income earned during the marriage.
Although prenuptial agreements are not legally binding in England and Wales, they are likely to be upheld if the couple have entered one freely, have had independent legal advice, and have made financial disclosure of their assets and liabilities.
Prenuptial agreements are becoming more common, and courts are increasingly willing to uphold them if they are fair.
It is advisable to sign a prenuptial agreement at least 28 days before the wedding.
A post-nuptial agreement can be made after marriage to confirm the couple’s intentions if a prenuptial agreement was not signed in time.
What Happens If You Don’t Want a Prenup
Simply put, if there is no prenup, the court will decide how assets are divided, which can be unpredictable. Those marrying later in life or for a second time may be at greater risk of losing pension benefits on divorce.
The outcome of the finances on divorce is guided by a checklist of factors including the financial resources of the couple; their financial needs; the length of their marriage; and their financial and non-financial contributions.
The courts also apply a number of principles including the principle of non-discrimination. This means that there should be equal recognition of women and men; the court will also consider fairness, including sharing and meeting each person’s needs.
Without a prenup, the court has wider discretion and may interpret needs more generously than if a prenup is in place. However, with a prenup, financial support for the less wealthy spouse is usually limited to preventing real hardship.
Is There a Way to Protect Your Assets Without a Prenuptial Agreement?
Yes, this is known as a post-nuptial agreement and can’t be made after the wedding and is legally binding in the same way as a prenup.
Unmarried couples can set out property ownership in a declaration of trust, usually when buying a property. Married couples can also use a cohabitation agreement to set out how finances will be managed during the relationship and on separation.
However, declarations of trust and cohabitation agreements are not binding after marriage and should not be relied on if you divorce. A more common option is nuptial agreements are recommended if you want to confirm how assets and income will be divided on separation or divorce.
It is also important to note that estate planning and making a Will are also important to protect your position on death, whatever your relationship status.
Frequently Asked Questions
What Can’t Be Included in a Prenuptial Agreement?
Prenuptial agreements cannot dictate child custody or support arrangements as they are determined based on the child’s best interests by the courts. Personal matters like household chores or intimacy frequency fall outside the scope of prenuptial agreements.
What Makes a Prenuptial Agreement Void?
Prenuptial agreements can be rendered void if certain conditions are not met, these may include:
The lack of consent such as coercion or pressure to sign
Incomplete or false disclosure of assets and financial information
Terms that are excessively unfair or one-sided
Failure to adhere to legal formalities like proper documentation and signing
Are There Downsides to a Prenup?
While prenuptial agreements have benefits, discussing them can sometimes cause tension or discomfort between partners.
Prenups are less flexible, as terms are agreed in advance and may not suit future circumstances. Some may also feel that suggesting a prenup shows a lack of trust.
In some situations, a prenuptial agreement is necessary to protect your assets and provide certainty for the future.
