A recent survey by the Marriage Foundation, a charity that promotes marriage, indicated that up to one in five couples enter into a prenuptial agreement (commonly abbreviated to ‘prenup’), before they get married.
The statistic has been disputed by family lawyers, who consider that it is very high. Nevertheless, it does suggest that more couples may be entering into a prenup than ever before. Perhaps also the stigma of prenups being ‘unromantic’ is lessening.
So what is a prenup, and do you need one?
What is a prenup?
A prenup is a written agreement entered into between the parties before they marry. The agreement will typically set out what is to happen to the parties’ finances, in the event that the marriage should end in divorce.
The agreement may simply state that the parties will keep their finances separate, and that each party will keep their own property on divorce.
Or the agreement may specify how jointly owned property is to be divided on divorce.
In fact, there are few limits upon what may be agreed regarding finances, so long as the agreement is not clearly unfair to one of the parties – if it is, then the court is unlikely to uphold it.
Note that prenups should not usually be used to set out arrangements for any children on divorce, including what maintenance should be paid for them.
Why get a prenup?
A prenup is not for everyone. For example, a young couple getting married for the first time may see little reason to enter into one.
But there are a number of situations where a prenupmay be a good idea, not just when the ‘richer’ party wants to protect their assets!
It is not possible to set out a definitive list of all the situations in which you should get a prenup. However, the reasons for considering a prenup mightinclude the following:
1. Pre-owned assets – Perhaps the most common situation where a prenup is wanted is where one of the parties to the marriage owns significant assets, and they wish to protect those assets in the event of a divorce. The prenup may, for example, state that each party will keep all assets they owned prior to the marriage, with only assets acquired after the marriage being divided between them.
2. Business assets – A similar situation is where one of the parties has substantial business assets. Obviously, if it is included in a divorce settlement this can be very damaging for the business. The party owning the business may therefore want a prenup to ensure that the business is kept out of the divorce settlement.
3. Second marriages – Often, where a party is marrying for a second time they may have accumulated assets from the first marriage. They may want to protect those asserts via a prenup, to make sure they keep them in the event of a second divorce.
4. Children of first marriage – A common scenario is where one of the parties to the marriage has children from a previous marriage or relationship. They may be concerned that if they were to die their assets will all pass to their spouse, leaving those children with nothing. A prenup can help to ensure that this does not happen.
5. Older couples – Older couples will often have accumulated significant wealth prior to the marriage, including pensions. They may therefore want a prenup, to protect that wealth in the event of a divorce.
6. Inheritances – Inheritances can obviously be substantial, and quite ‘personal’, especially when they are from deceased family members. A party may want to try to protect an inheritance, by using a prenup.
7. Certainty – The divorce court has a discretion as to what financial settlement to order. This means that one judge may make quite a different award to another judge. It may therefore be desirable to clear up this uncertainty by entering into a prenup, stating exactly what will happen on divorce.
8. Avoiding conflict – A contested divorce can be expensive, time-consuming and stressful. A prenupmay simply be seen as a way of agreeing a financial settlement in advance, thereby avoiding possible conflict.
Note that it may not always be possible to protect assets with a prenup, as the divorce court may not be prepared to uphold the prenup. We will be able to advise you upon the likelihood of your prenup being upheld.
For more information about prenups, see this page.