If you are getting married or entering into a Civil Partnership, you may have considered whether you and your spouse-to-be should enter into a pre-nuptial agreement. The information contained in this article may help you to decide if this is the right option for you.

What is a Pre-Nuptial Agreement?

A pre-nuptial Agreement is a legal contract made between two people who are planning to marry or enter into a Civil Partnership. Generally, the purpose of a pre-nuptial agreement is to set out how financial matters would be dealt with in the event of a divorce or dissolution, and to protect the assets held by one or both parties prior to the marriage, by ringfencing them and therefore keeping them out of the Matrimonial ‘pot’, given that the starting point on divorce is that matrimonial assets are shared equally. Assets including but not limited to savings, property, stocks, shares, or an interest in a family business can be included in a pre-nuptial agreement and can be tailored to the specific circumstances.

Are Pre-Nuptial Agreements legally binding in England and Wales?

Pre-nuptial agreements are not legally binding in England and Wales. This means that even if you enter into a pre-nuptial agreement, this cannot override the court’s ability to make orders about how finances should be divided on a divorce and cannot prevent a person from making an application to court. Pre-nuptial agreements can however be persuasive to a court, and generally the stronger that the overall agreement is, the more likely a court will be to take it into account and follow the terms of the agreement.

To give a pre-nuptial agreement the best possible chance of being upheld by the court on divorce, the below conditions should ideally be met:

• The agreement must be freely entered into by both parties. This means that there should not be any pressure to sign the agreement by either person or anyone else. If, upon divorce, one person was to say that they felt pressured into entering into the agreement, this could reduce the overall strength of the agreement and the court may decide not to follow the terms of the pre-nuptial agreement for this reason.
• Both parties should receive independent legal advice, to ensure that they fully understand the implications of the agreement. If one person did not receive legal advice at the time of preparing the pre-nuptial agreement, they could potentially raise on divorce that they did not fully understand the agreement that they were signing and state that the terms of the pre-nuptial agreement should not be relied upon for this reason.
• Financial disclosure should be exchanged as part of the process, so that both parties can see the extent of the other’s financial position. This will assist with negotiating with your partner about what the terms of the agreement should be, and full financial disclosure will be required for your solicitor to properly advise you on what the terms of the pre-nuptial agreement should be.
• The terms of the agreement must be fair and meet the needs of you both. This is why it is also important to review a pre-nuptial agreement every few years or after big life events such as the birth of a child, as the terms of a pre-nuptial agreement may need to be amended to ensure that it remains fair for you both. A family law solicitor can assist with advising on the relevant legal principles and what a fair outcome could be. If a pre-nuptial agreement would provide one party with less than what they require to meet their needs, the court will very likely view the agreement to be unfair and refuse to uphold it.
• A Pre-Nuptial agreement should be agreed as far in advance of the wedding date as possible, and generally no less than 28 days before the wedding. We appreciate that it may be difficult to find the time to consider a pre-nuptial agreement especially in the lead up to a wedding but ensuring that you allow plenty of time to finalise the agreement could help to reduce any arguments on divorce that one party felt pressured into the agreement due to time constraints. You will also need sufficient time to consider the terms of the agreement and receive legal advice, so that there is no last-minute pressure on either party as the wedding day approaches.

It can be a common misconception that pre-nuptial agreements can be drawn up and finalised very quickly before the date of the wedding, however, this is often not the case. Pre-nuptial agreements can often be lengthy and complex documents to prepare, which is why it is advisable to seek legal advice from a solicitor well in advance of the wedding date, so that there is sufficient time to finalise the agreement.

Advantages of entering into a pre-nuptial agreement

• Clarity about the ownership of certain property and what will and will not be shared during the marriage or on any future divorce.
• Certainty at the outset of the marriage about how finances will be divided upon separation or divorce, which could help to save the time and stress of going to court to reach agreement about the financial arrangements.
• As financial disclosure would be exchanged as part of the process of preparing a pre-nuptial agreement, this would provide couples with transparency about the value of each other’s assets.
• Entering into a pre-nuptial agreement may help to save money. It is usually much less expensive to prepare a pre-nuptial agreement than to go to court to deal with the financial arrangements upon divorce.
• A pre-nuptial agreement can help to protect assets that you may wish to ringfence, such as inherited assets, family heirlooms, or interests in family businesses.
• If either person has debts, a pre-nuptial agreement can be used to protect your assets from being used to satisfy the other person’s debts.
• It can be agreed in a pre-nuptial agreement that one person should receive a greater share of the assets on the breakdown of a marriage to reflect loss of earning power as compensation for their loss of career, if for example, one person has given up a career to look after the family.
• Entering into a pre-nuptial agreement may help to reduce conflict on divorce. It can also assist with communication as it encourages discussions around the financial arrangements.
• A pre-nuptial agreement can also set out what you wish to happen to your assets on your death, to support the terms of a Will.
• A pre-nuptial agreement can provide you with the freedom to agree your own terms without the court imposing a solution on you.

Are there any disadvantages?

There are also some potential disadvantages to entering into a pre-nuptial agreement which should be considered, including:

• That pre-nuptial agreements are not legally binding, and the court is able to override these agreements.
• Future circumstances cannot be predicted, which could impact on the overall strength of the agreement over time, if the terms of the agreement are no longer fully relevant.
• Pre-nuptial agreements should be reviewed periodically to increase the likelihood of a court upholding the agreement.
• A pre-nuptial agreement can only be entered into with the agreement of both parties. If one person does not want to enter into the agreement, you cannot force them to do so.
• You may not wish to discuss and consider your financial arrangements in the event of a divorce, especially when planning a wedding. This may also add more stress in the lead up to a wedding or cause strain within the family.
• Legal fees will be incurred as both parties should obtain independent legal advice.

What is a Post-Nuptial Agreement?

A post-nuptial agreement has the same legal effect as a pre-nuptial agreement. The only difference between the two is that a Post-Nuptial Agreement is prepared after the marriage has taken place. It is often advisable to enter into both a pre-nuptial and a post-nuptial agreement, as doing so could help to strengthen the overall agreement, as no argument could then be raised upon divorce that a party was pressured into signing the agreement due to the upcoming wedding.

Will the law ever change in relation to nuptial agreements?

As the law currently stands, pre and post nuptial agreement are not legally binding, although they have a good chance of being upheld if they are fundamentally fair. It is however important to bear in mind that the legal status of pre-nuptial agreements in England and Wales may change in the future, as the Law Commission have made recommendations to make nuptial agreements legally binding if they adhere to certain criteria. This is not currently in effect, but it is important to be mindful of how the law may change in the future.

Here at Geldards, we completely understand that it may be difficult to initiate a conversation with your partner about entering into a nuptial agreement, especially in the lead up to a wedding. This is something that we will always have in mind when assisting you, and we will deal with matters sensitively and in a way that aims to reduce conflict.

All of the solicitors in team at Geldards are members of Resolution, which is an organisation of family lawyers and other professionals committed to dealing with matters in a constructive and non-confrontational way. For further information, the Resolution website can be accessed here: https://resolution.org.uk/.

If you would like to have a confidential conversation with one of the specialist family law solicitors at Geldards about whether it would be in your best interests to enter into a nuptial agreement, please do not hesitate to contact us.