Thea Dunne, from divorce lawyers Vardags, explains why the prenuptial agreement isn’t just for celebrities.
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Prenups in the UK
Prenuptial or antenuptial agreements are voluntary legal contracts signed before marriage which set out financial provision, and sometimes other arrangements, in the event of a breakup.
Commonly known as prenups, they are increasingly popular with people who have children from previous marriages, businesses and inherited property to protect, because they allow a degree of future-proofing.
Legally enforceable in England and Wales since the Supreme Court case Radmacher v Granatino in 2010, couples who sign their agreement and marry here can now have some assurance that their prenup is worth the paper it’s written on. Though not absolutely binding, the court will now seek to apply a prenuptial agreement which a couple freely entered into while aware of the implications, unless it is shown to be unfair.
Prenups can well-suited to couples who want to marry and separate on chosen terms, and if done well can help avoid painful and lengthy litigation later down the line. Normally, if your relationship breaks down and you can’t come to an agreement, it’s entirely up to a judge how your wealth is divided.
For the best chance that a judge will enforce your prenuptial agreement later down the line, there are best practices you can follow.
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Be realistic
Children come first
While a former spouses’ needs are typically interpreted to be minimal, children’s needs will always be put first by the court. Settlements cannot be allowed to prejudice the reasonable requirements of any children so a prenup will be overturned if it does. It also may affect the interpretation of needs.
For instance, in the 2014 case Luckwell v Limata, a wife had a net worth of £6.7 million, while her estranged husband had net debts of £226,000.
Despite him having signed a prenuptial and two supplemental agreements agreeing that he would not make a claim to his wife's property or to gifts from her family, the judge ruled that it would be fair for her to buy a house and lease it to him at a nominal rent.
Particularly given that the couple had young children to raise, it was understood that it would not do, when one parent was property rich, to have the other living in relative penury.
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Make sure both of you are on board
Perhaps it goes without saying, but both parties need to sign willingly and understand what it is they are agreeing to.
Independent legal advice, while not required, is advisable. As a general rule, don’t sign anything you don’t understand. Exchanging a schedule of assets and income is considered a sensible step.
If the parties don’t take sound legal advice or seek out the full picture of their partner’s financial situation, then the judge in deciding how much weight to give the agreement, may look at the parties’ ages, maturity, previous experience of marriage and whether the marriage would have gone ahead without a prenup.
If the court discovers that the agreement was signed under duress, the agreement will, in theory, be dismissed.
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Review and amend
It might be worth reviewing your prenuptial agreement as time goes on. Significant changes in your personal circumstances such as health, children, or privacy if you become high-profile will likely be worth incorporating into the agreement.
A couple may plan to run their professional lives and finances separately until their first child is born. An older couple may want to keep finances separate until one has to become the other’s carer. Homemaker and breadwinner roles can vary, or reverse with time. A business can take off.
Some prenups may be fairly simple and static, keeping a family inheritance separate from the money you built up together whilst married for instance, or ring-fencing a business. But in all likelihood if you find your role within the marriage has changed, there’s a good chance your prenup may need to too.
Thea Dunne is a journalist and publicist at family law specialists Vardags. The views expressed in this article do not necessarily represent those of loveMONEY.