Should I get a Prenuptial Agreement?

42% of marriages end in divorce, but we keep taking the risk. Why? - Because we're led by social convention? Is it because it's tax-efficient? Or because we're optimistic romantics? If you're getting married, consider a prenuptial agreement, especially if you have children.

The financial consequences of bitterly fought divorce proceedings can be ruinous, especially for wealthy individuals. Signing a prenuptial agreement can keep things as fair and simple as possible if the relationship breaks down.

What is a prenuptial agreement?

No fixed proportion of your assets goes to your spouse after death or divorce (unless you die without a will). If you and your partner disagree, the fairest outcome must be argued by law.

A prenup agreement is a legal document you and your future spouse draw up before you get married. It outlines how you will divide assets if you get divorced. A pre-registration agreement is the equivalent for a civil partnership.

It is not automatically legally binding, so we recommend that you have a legal professional draft the document to ensure the agreement complies with the criteria required for a court to uphold it.

What is the purpose of a prenup agreement?

A prenuptial agreement may be the best way to protect your assets because you and your partner list all of your pre-marriage assets and agree on your property rights after the marriage. It can help a couple deal with a substantial wealth difference or when one partner has a property or a business which they want to keep in their family and not share with their new partner if they split up.

How does a prenup protect you?

Prenups can protect you from several risks, essentially allowing you to ring-fence assets so that they would be 'off the table' during the division of assets in the unfortunate event that the relationship ends in divorce proceedings.

How does a prenup protect your pre-marital wealth and assets?

You can specify which assets or wealth will be shared equally and which you will keep. For example, if you own several properties, you might want to keep the investment properties in case of a divorce but split the matrimonial property (the home you shared as a couple). You can agree to keep the assets you each came into the marriage with or to treat some as shared assets.

How does a prenup protect your future wealth and inheritance

If one partner has investments that you hope will return a high yield or expect a large inheritance later in life, you may want to protect these against the risk of divorce. You may also be concerned that your spouse would receive a portion of your pension if you divorce. You can agree that these will remain yours after a divorce.

A prenuptial agreement can cover marital assets (acquired after the prenup and marriage). Clauses can be included to define how you'll split these future assets, perhaps according to whose income paid for them.

For more information on asset protection before marriage, check out our article here.

How does a prenup protect your business?

If you own a business, especially if it has been a self-started labour of love or is a family business that has been passed down to you, you can use a prenup to protect against your spouse staking a claim to it or any of its business assets in the event of a divorce.

How does a prenup protect your children?

If you have children from a previous relationship, you may want to ensure they inherit your property and wealth rather than pass it all to your new spouse by default. It is important to note that marriage overrides an existing will, and your new spouse might establish a right to a share of your shared home, even if you are the sole legal owner.

A prenup, in combination with a new will drawn up after the marriage, can help to ensure that your kids get their inheritance. If your primary concern is ensuring your estate passes to your kids, you may benefit from placing your share of the property into a lifetime trust or will trust.

Does a prenup protect you under international divorce law?

If you are marrying someone from another legal jurisdiction, there are occasions where you may be affected by the laws in your partner's home country. A prenuptial agreement can help to keep you from falling foul of these laws.

Do prenups work in the UK?

Pre-nuptial agreements are not automatically enforceable in courts in England and Wales. It can be disputed if it is not done properly; however, in 2010, the Supreme Court ruled that courts should give effect to a pre-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 their agreement. They will be considered on a case-by-case basis.

The family courts won't uphold an unfair agreement, whether it was unfair at the time or has become unfair due to either party's changing financial circumstances.

For a prenuptial agreement to be honoured by the family court, it must meet the following criteria:

What should be included in a prenuptial agreement?

• You must receive independent legal advice from separate solicitors
• It must be fair
• You must both give full financial disclosure
• You must allow enough time to consider and negotiate terms
• Sign the document at least 28 days before the marriage
• The terms should allow for both parties to have somewhere to live and money to live on

To better secure the terms of your prenuptial agreement, you can sign a post-nup agreement after the marriage. It is also worth noting that marriage overrides your will. Speak to a solicitor for legal advice.