Talking to your partner about a pre-nuptial agreement can be an uncomfortable conversation. However, in many circumstances, it is sensible to ensure that certain financial assets you already own are secured for your future.
Once you are married, there may be circumstances where you inherit assets, your personal wealth increases or you decide you want to protect assets you owned prior to the marriage. In those circumstances, the only way to try to protect yourself against such claims on separation is by having entered a pre- or post-nuptial agreement.
In this article we will cover what both a pre- and post-nuptial agreement is, what should be in one and the benefits of having one before you marry or during your marriage.
What is a Pre-Nuptial Agreement?
While most people enter marriage with the intention of living ‘happily ever after’, sadly life doesn’t always work out that way and nearly half of all marriages end in divorce.
In the UK, a prenuptial agreement, informally referred to as a ‘prenup,’ is a legal document drawn up between a couple before marriage. A prenup will outline how the couple’s assets will be divided between them in the event of a divorce or separation. In absence of such an agreement, a spouse can seek to claim against the assets brought into the marriage by the other, no matter how short the relationship is and irrespective of whether your spouse has made any form of financial contribution to the marriage at all.
For couples entering a civil partnership the same type of document is called a pre-registration agreement or a pre-civil partnership agreement.
How Do Pre-Nuptial Agreements Work?
In England & Wales, prenups work by allowing you to ring-fence certain assets that you want to keep out of a future divorce settlement. It usually includes an inventory of your assets and details on how you and your partner wish for them to be managed after your marriage and how they will be divided should it break down.
Assets such as property, debts, and income are covered in a prenup to help avoid any financial surprises if the relationship were to break down. Such agreements can also include terms specifically tailored to provide for changing circumstances in future for example the birth of children.
If there are any assets which you would prefer not be divided between you and your partner, these should be included in your prenuptial agreement.
You each need to instruct a family law solicitor before signing your prenup, to ensure you have not been influenced, that you understand how prenups work and the implications of signing the agreement.
When it has been signed, your prenup is officially in place.
If you have no intention of getting married but still want a formal agreement before moving in together, a cohabitation agreement may be a better option to try to minimise risk of costly disputes later.
The Benefits of a Pre-Nuptial Agreement?
You should consider drawing up a prenuptial agreement before you get married if you want to determine how your property and finances will be dealt with if you were to separate.
Prenups are particularly important when people already have property or are expecting to receive an inheritance. For example, someone who has divorced before and received a property as part of a divorce settlement, may want to keep that property separate if they decided to remarry.
The main reasons we would advise you to get a pre-nuptial agreement would be:
– To avoid uncertainty or conflict over finances
– To protect any money and/or assets that you have inherited
– To preserve assets for any children from previous relationships
– To ensure you retain control of your business
– Protection from being liable from any debts your partner has
There have been high profile cases in the news where pre-nuptial agreements were not created before marriage and marriages have broken down. Assets and business interests owned by one partner were not protected and their ex-partners were then awarded large financial settlements simply by virtue of marriage.
How Long Does a Prenup Last?
A prenuptial agreement will last for the full duration of your marriage. The agreement can also include a clause that it be repeatedly reviewed so it can be adapted by subsequent agreement to cater for the changing needs of your family.
Is a Cohabitation Agreement the Same as a Prenup?
If you are not yet married, there are two types of agreement you can enter, a cohabitation agreement or a prenuptial agreement.
A cohabitation agreement is for couples who are living together, but don’t have plans to get married or enter a civil partnership. A prenup or pre-registration agreement is for couples who are planning their marriage or civil partnership.
What is a Post-Nuptial Agreement?
A postnuptial agreement, or a postnup, allows those who are already married or in a civil partnership to set out what would happen to their assets if they were to separate or get divorced.
This may be because they didn’t enter into a pre-nuptial agreement before getting married, or where there has been a separation followed by a reconciliation.
Similar to a prenup, a postnup sets out how your property, investments and finances will be divided if you choose to separate and covers everything from earnings and inheritances to gifts and family vehicles.
The Benefits of a Postnup Agreement?
A post-nuptial agreement might be particularly beneficial where:
– You have more savings or income than your partner
– You want to protect assets you owned prior to the marriage, including inheritances or family trusts
– To outline any ‘nonmarital assets,’ such as any business assets owned by you
– You have children from a previous marriage or relationship, and wish to protect assets for the purposes of inheritance planning
– You are set to inherit assets whilst you are married
What Can a Prenup & Postnup Include?
Pre- and post-nuptial agreements are tailored to fit your personal circumstances and can include:
– How much each of you contributes to rent, mortgage, or household bills until you’re able to vacate or sell your home, if this is what you’ve agreed
– How you will deal with any joint bank accounts, including savings, and any debt
– How you will deal with any property or the sale proceeds of a property, after paying off any mortgage or sale costs
– What will happen to any items you have bought together including cars and furniture
– What would happen to your pets
– Maintenance for either of you or any children
– Who the children will live with and arrangements for seeing the other parent
– Stocks and shares
– Business interests, such as property owned for business purposes
These types of agreements are more likely to be needed when a partner already has or is likely to acquire more assets than the other.
Do Pre & Post-Nuptial Agreements Hold Up in Court?
Not automatically and this is a complex area of the law. However, such agreements are often upheld provided they are professionally drafted to include the required safeguards and the agreement is broadly seen as reasonable and fair for both parties on separation.
Recent family law and divorce cases have shown that a court will invariably take a prenup into account when deciding how assets between a husband and wife or partners should be divided if done properly.
If you are planning to marry and looking to create a prenup or are already married and looking for a postnup, our team of experts are here to help. We know it can be worrying contacting a divorce solicitor, but you’ll find our team approachable and easy to talk to. We also offer a free 30 minute appointment to all new clients.
Call us on 0114 249 66 66 or request a call back below.