A pre-nuptial agreement is a contract entered into between a couple prior to marriage or civil partnership which outlines how they will divide their assets in the event of separation, divorce or dissolution of civil partnership.
You can also enter into a post nuptial agreement, the only difference being that it is entered into after marriage.
Are they legally binding?
Nuptial agreements are not automatically binding in England and Wales. However, recent case law means judges increasingly give them significant weight in financial remedy cases, especially when couples meet certain criteria.
Why should you get one?
Nuptial agreements provide clarity and peace of mind regarding what will happen in the event of separation, divorce, or dissolution.
Today, many couples enter marriage with unequal wealth. For example, you might have built up pre-marital assets, received an early inheritance, or already own a business. In these situations, a nuptial agreement can ring-fence pre-marital assets and protect family wealth or business interests.
If you are remarrying, a nuptial agreement can also safeguard assets for children from a previous relationship.
Without a nuptial agreement, separating couples must rely on the current financial remedy law. Whilst pre-marital assets are a factor that a judge can consider, the starting point is usually a consideration of why there should not be an equal division of assets. If couples have a nuptial agreement, the starting point is to consider whether the terms set out in the agreement should be adhered to.
What criteria needs to be met?
In the 2010 case of Radmacher v Granatino, the Supreme Court said:
“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement.”
This set out a three-stage test that judges must apply when considering whether to uphold the terms of a nuptial agreement.
- The agreement must be freely entered, with no undue pressure or duress. It is good practice to sign a pre-nuptial agreement a minimum of 28 days before the wedding. The closer to the wedding that the document is signed, the more likely it is that one party could allege they were under duress to sign. In cases where there are less than 28 days, it is usually recommended to sign the document after the wedding, thereby entering into a post nuptial agreement.
- Both parties must have independent legal advice and a full understanding of the assets involved, to ensure they have fully aware of the rights they are surrendering or acquiring.
- The agreement must be fair and reasonable in the circumstances of the case. In the event of separation, the court will need to consider whether the terms of the agreement are broadly fair and meet the parties needs. It is unlikely that a nuptial agreement would be upheld if it left one party in financial hardship and the other with significant wealth. Circumstances can change over time, for example the birth of a child, long term illness or disability, so it is important to review nuptial agreements on a regular basis to ensure that the terms remain fair and reasonable.
Summary
Nuptial agreements are becoming increasingly commonplace and should be viewed as a pragmatic financial planning tool, much like making a will. Hopefully, parties will never need to rely on a nuptial agreement. However, in cases where this is necessary, having a nuptial agreement in place can reduce acrimony between the separating couple, as they will already have clarity on how their assets should be divided.
Giving you the full picture
If you’d like to discuss how a pre-nuptial or post-nuptial agreement could work for you, our specialist Family Law team is here to help. We’ll walk you through your options and provide clear, practical advice tailored to your specific circumstances. Contact us today to arrange a confidential, no-obligation conversation.
