What is a prenuptial agreement and why should I enter into one?

26 July 2023

A prenuptial agreement is an agreement which is entered into before marriage that sets out the division of assets and any financial support if the marriage breaks down.

Legal status of pre-nuptial agreements

Pre-nuptial agreements are not enforceable or strictly binding in the law of England and Wales, but if the pre-nuptial agreement has been entered into freely by both parties, with a full understanding of the implications of the agreement, with all information that is relevant, the family court should give effect to the agreement, unless in all the circumstances it would be unfair to hold the parties to the agreement or it could prejudice the reasonable requirements of any child of the family.

The court will consider the pre-nuptial agreement with the section 25 factors under the Matrimonial Causes Act 1973, which are the factors that a judge will consider when determining how to divide assets in a financial claim on divorce. No pre-nuptial agreement can oust the legislation or fetter the judge's discretion on determining the division of assets in a financial claim on divorce. A clause in a pre-nuptial agreement that try to fetter this discretion or prevent a party from applying to the court for financial provision would be invalid.

How does the court treat a pre-nuptial agreement and what factors need to be present for it to be upheld?

The family courts are placing an increasing weight on pre-nuptial agreements, as long as certain factors and safeguards are met. This was decided in the leading case of Radmacher v Granatino 2010.  An agreement to carry full weight, it will need to have the following factors:

  1. It must have been entered into by the parties' free will. It is unlikely to be upheld if there is evidence that there was a mistake, duress, undue influence, misrepresentation or unconscionable conduct.
  2. The parties will need to have been informed of the implications of the agreement and have a full appreciation of the implications of the agreement.
  3. It must be fair to hold the parties to their agreement in the circumstances.
  4. The parties would need to have had all the information that is material to their decision to enter into the pre-nuptial agreement.
  5. The parties must intend that the agreement will determine the financial consequences of their marriage coming to an end.

What can be included in a prenuptial agreement?

The prenuptial agreement sets out how the parties wish their assets to be divided if they separate or divorce. It can also include how they wish their finances to operate during the marriage.

It defines the ownership of current assets and who will own future assets on the breakdown of a marriage, by defining matrimonial property (assets built up during the marriage) and non-matrimonial property (assets owned before the marriage, inheritance, gifts).

An agreement can include financial provision for children, but would not include child arrangements, this could be dealt with in a Parenting Plan.

Can you change a prenuptial agreement after your marriage?

If a party wished to amend a prenuptial agreement, they would need to enter into a postnuptial agreement. They are treated in the same way as a prenuptial agreement but are after marriage.

When should I enter a prenuptial agreement?

At least 28 days before your wedding.

How do I enter into a prenuptial agreement?

A prenuptial agreement will need to be drawn up by family lawyer. It is important that both parties get legal advice, to understand the agreement and disclose their assets.

What if I am a high net worth individual and I have a lot of assets abroad?

It is common for prenuptial agreements to involve assets abroad. In the leading case on pre nuptial agreements, the English courts said they would apply English law, irrespective of where the agreement was written or where the parties were domiciled. If there are assets abroad and other jurisdictions in play, it is important that the parties take advice on what the implications could be in the other jurisdictions relevant to the parties.

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