Prenuptial agreements: Why they matter and how they work
Prenuptial and postnuptial agreements are no longer unusual, in fact what once was seen as niche or arguably unromantic, they are now a practical planning tool for many couples.
The question is no longer why would you have one, but when does it make sense not to?
Here, we explain what prenuptial agreements are, why their use is generally increasing, how the courts approach them, and what recent case law tells us about their effectiveness.
What Is a Prenuptial Agreement?
A prenuptial agreement is straight forward in essence, in short it is a formal agreement entered into before marriage. Within this agreement, it will be set out how a couple’s assets are to be treated during the marriage and how they should be divided if the marriage later comes to an end.
In England and Wales, prenuptial agreements have historically been viewed with caution, it isn’t particularly unusual for any couples to be deterred from entering one as they may seem somewhat unnecessary when you may feel like you have such a positive future ahead.
Nonetheless that position has shifted, in fact a 2021 report by the Marriage Foundation found that one in five couples married since 2000 had entered into some form of prenuptial agreement.
Why Prenuptial Agreements Are Becoming More Common
This rise has seemingly little to do with changes in the law and far more to do with changes in how people live, work and form families; generally a growth in what may be described as a more progressive societal norm.
It isn’t unusual for people to marry later in life, and by that stage, one or both parties may already own property, run a business or have accumulated savings and investments they wish to understandably protect.
Property ownership is a frequent driver; one party may have purchased a home independently and want clarity around how that asset would be treated if the marriage ended. It isn’t only that though as family contributions also commonly play some sort of role.
With property prices high and lending more restrictive, parental assistance is relatively common, indeed a prenuptial agreement can help preserve such pre-marital assets and valuable family contributions.
Secondary Marriages: Is It More Useful to Have a Prenup?
Second and subsequent marriages are more frequent, as are blended families, that being said in those circumstances, prenuptial agreements can help protect assets intended for children from previous relationships.
Even practical matters now feature more often. While the courts treat pets as property, a prenuptial agreement can record agreed arrangements in the event of separation.
Taken together, these factors explain why prenuptial agreements are no longer reserved for the ultra-wealthy, they’re for every couple no matter the stage of life they’re in.
The Legal Status of Prenuptial Agreements
Prenuptial agreements have always been lawful in England and Wales, what has varied over time is the weight the courts are prepared to give them.
That position was clarified by the Supreme Court in Radmacher v Granatino (2010). The court held that a prenuptial agreement should generally be upheld where it has been freely entered into by both parties, with a full understanding of its implications, unless it would be unfair to do so.
One thing to remember is that the court is not strictly bound by a prenuptial agreement.
However, where the agreement is properly prepared and fair in its effect, it will usually carry decisive weight. Fairness will always depend on the circumstances of the couple at the time the agreement is assessed.
The Future of Prenuptial Agreements
In 2014, the Law Commission recommended legislation to introduce legally binding “qualifying nuptial agreements”. Provided certain safeguards were met, such agreements would be enforceable without the court undertaking a discretionary assessment of fairness.
A decade on, that recommendation has not yet been implemented. On the other hand the government has indicated that it will not legislate on prenuptial agreements until wider reforms to financial provision on divorce and civil partnership dissolution are considered.
While statutory reform remains on hold, the courts continue to treat well-prepared prenuptial agreements with seriousness and respect.
Case Study: MN v AN (2023)
The 2023 case of MN v AN reinforces the modern judicial approach.
The parties entered into a prenuptial agreement shortly before marrying in 2005. The husband, aged 61, had assets of approximately £32.5 million. The wife, aged 51, had assets of around £62,000. Both parties received independent legal advice and negotiated the agreement through their solicitors.
When the marriage ended in 2019, the wife challenged the agreement, she argued that it did not meet her needs and that she had been subjected to undue pressure to sign.
The court rejected those arguments. It found no evidence that the agreement had been entered into improperly and concluded that it made adequate provision for the wife’s income needs.
In this instance, the prenuptial agreement was upheld.
This is a case in particular that is a clear reminder that where agreements are entered into freely, with advice and full disclosure, the court will likely enforce them.
Considering a Prenuptial Agreement?
Prenuptial agreements are firmly established in modern family law. Legislative reform may follow in time, but even under the current framework, properly drafted agreements provide some level of comfort and security - so long as due diligence is properly executed during drafting.
At Orwins, we advise clients across London, Manchester and beyond on both prenuptial and postnuptial agreements. For many couples, a prenuptial agreement is not about anticipating separation, it is instead about transparency and reassurance. If this is something you’re considering, get in touch with our skilled legal team at Orwins.
Frequently Asked Questions
What procedural steps should be followed?
To give a prenuptial agreement the strongest chance of being upheld, it should:
Be carefully drafted to achieve fairness and meet both parties’ needs
Be supported by full and frank financial disclosure, summarised in schedules
Allow time for negotiation
Be entered into with independent legal advice for both parties
Be signed well in advance of the wedding, at least four weeks is recommended
How does a prenuptial agreement differ from a marriage agreement?
Prenuptial agreements are specifically designed to address the ownership and division of assets on separation. They differ from informal marriage agreements by being legally structured, tailored and supported by disclosure and legal advice.
How do courts in England and Wales treat prenuptial agreements?
Courts will generally uphold prenuptial agreements where they are entered into freely, with understanding and without unfairness. Each case turns on its own facts, but well-prepared agreements now carry significant weight.
