Yulia Barnes
Prenuptial agreements [“prenups”] are legal arrangements signed prior to a marriage or civil partnership that are intended to plan for the division of assets should that marriage fail.
Historically there has been a perception that prenups are just for the rich and famous, with as few as three per cent of people reporting signing a prenuptial agreement in 2010. However, attitudes have started to change, as more recently in 2022 15 per cent of people asked said they have signed a marital agreement.
Despite this uptick in the number of couples putting provisions in place, the pessimistic view of prenuptial agreements still exits and it is easy to see why. After all, nobody envisions starting their marriage with potentially daunting contractual negotiations.
But, is a prenup really inherently unromantic or is it common sense?
A practical response to an unfortunate reality
Individuals getting married may not want to think about the practicalities of splitting up at such an exciting time, but the reality is that almost half [42 per cent] of marriages end in divorce according to ONS figures. Therefore, a prenuptial agreement is a vital means to safeguard individual assets, create financial transparency and mitigate potential conflicts in case of a separation.
Rather than instruments of distrust, prenups can be tools of pragmatic foresight, allowing couples to align expectations and shield against unforeseen circumstances.
Furthermore, with recent studies showing that money is the biggest cause of conflict in modern marriages, drafting up a prenup can encourage couples to start out their marriage with a shared sense of openness and honesty. This can help put both parties into the mindset of working together to resolve financial issues, as well as acting an important reminder that they need to invest in their future beyond their big day.
The risk if things do go wrong
Although prenuptial agreements are not yet legally binding in England and Wales, this statement of strict legal principle is misleading. While the court always retains the power to award something different from what the parties themselves agreed in the prenup, a properly drafted agreement has a good chance of being upheld by the court in the event that it is challenged.
Without a prenup in place, an individual’s assets may be at risk in the case of a divorce. This includes their property, investments, and even businesses. If they have received an inheritance, a prenup can also help protect it. Otherwise, it may be considered marital property and subject to division.
Protecting your finances and assets after marriage
Couples who failed to put a prenup in place before the commencement of the marriage or civil partnership can still protect their assets via a postnuptial agreement.
Very similar to prenups, postnuptials have increasingly been given more weight and consideration by the courts. They set out exactly how assets should be distributed in the event of a divorce but are instead drawn up once the marriage has taken place.
Postnuptials are often utilised by couples who for some reason missed the opportunity to obtain a prenuptial agreement. However, they can also be beneficial for those who wish to ringfence money or assets coming their way after the date of marriage or civil partnership, perhaps for example, by inheritance or a gift.
In some other cases, a post-nuptial agreement is needed to ratify terms proposed in a prenuptial agreement that perhaps wasn’t considered sufficiently ahead of a date of marriage or civil partnership. This is to eliminate later claims of undue pressure being applied to enter into it, and so make its terms void.
Conclusion
Prenuptial and postnuptial agreements can make separation less painful, and deciding the financial arrangements on divorce in advance can prevent litigation and avoid stress and expensive legal costs further down the line.
Creating an effective prenup or postnup is not straightforward. Therefore, whether you wish to enter into an agreement or are being asked to sign one, it is always worth seeking the advice of a qualified lawyer who can help protect the assets you have worked hard for and empower you to make the right choices for you and your family.
Yulia Barnes is Founder and Managing Partner of Barnes Law.
