Considering a prenuptial agreement? Read on...
Do I Need a Prenuptial Agreement?
The most recent figures from the Office of National Statistics suggest that as many as 42% of marriages in England and Wales end in divorce. Whilst no couple embarking on a lifelong commitment anticipates being part of such a statistic, the increasing popularity of the prenuptial agreement speaks to the growing cultural pragmatism that surrounds the modern marriage and its potential permanence, despite our most ardent and romantic intentions.
At a time when couples choose to marry at an older age (giving one or both spouses time to acquire substantial assets before marrying); when subsequent marriages are commonplace (and the children from those early marriages need to be factored into inheritance wishes) and the sheer longevity of a lifetime facing both parties is at an all time high, many couples take the view that a prenuptial agreement simply makes sense. After all, isn’t it preferable to create an amicable and fully transparent agreement ahead of the marriage rather than try to achieve the same result under the distressing atmosphere of a looming divorce?
Are all Prenuptial Agreements Legally Binding?
The short answer is not yet. Currently the court maintains a broad discretion in matrimonial proceedings in order to reach a fair judgement under the Matrimonial Causes Act 1973. That is not to say a compliant prenuptial agreement will be disregarded in proceedings (far from it – they will be closely examined and taken into account); it’s just not simply the only consideration, or a default position of the court to accept. However, change is coming.
The Law Commission's report on prenuptial agreements seeks to set in place legislation that will ensure prenuptial agreements will be legally binding if they are a Qualifying Nuptial Agreement (QNA) and to do that, they need to meet strict criteria. Here's how to ensure, as the UK law currently stands, your prenuptial agreement is adopted by the court:
#1 – Follow the Rules
The rules associated with drafting a QNA are many and varied, covering specific points around financial disclosure, timing and contractual validity. Failure to comply with any one of these could be grounds for a court to dismiss the validity of a prenuptial agreement so it’s incredibly important to choose a legal representative who will explain these to you in good time, ahead of your marriage.
#2 – Make No Assumptions
For couples who already have a prenuptial agreement executed in a foreign country, it may be that this agreement will not translate exactly under UK matrimonial law should they decide to divorce in England or Wales. It is always recommended that your UK legal representatives carefully examine any foreign prenuptial agreement for its validity against the criteria of a QNA. In some cases, it may be necessary to create a postnuptial agreement (also a form of QNA) to ensure the couple’s wishes are clear under UK jurisdiction.
#3 – Consider Needs
Finances can and often do fluctuate in the course of a marriage. The UK courts will always take the financial needs of both parties (and any children) as a starting point and primary consideration in the division of assets. For example, if the assets of the wealthier spouse were acquired before the marriage but were now needed to meet the needs of both parties, these would not necessarily be ‘ringfenced’ even with a prenuptial agreement if there were no other assets to rely upon to meet the needs of the less wealthy spouse.
Next Steps
If you’re considering whether a prenuptial agreement is right for you and want more information on what to expect, CLICK HERE to download our Client’s Guide to Prenuptial Agreements or contact us to discuss your requirements.