When planning a wedding, it is fair to say in today’s society that it is not unromantic for the bride and groom to worry about what the future brings and whether they should be entering into some kind of agreement to secure their financial future. The word ‘pre-nup’ comes to mind.
What exactly is a ‘pre-nup’?
A pre-nup or a prenuptial agreement sets out how a couple’s assets, income, capital and pensions are to be divided upon divorce. It is entered into by both parties prior to the marriage taking place.
What are the benefits of having a prenuptial agreement?
An agreement can avoid possible lengthy, upsetting and emotionally draining financial proceedings on divorce where a Court may end up making the decision of who gets what.
People with significant wealth, assets and pensions going into a marriage may want to protect what they have built up. Others with a high income and earning capacity may want to limit the amount of maintenance they might have to pay their spouse on divorce.
It is really used as a planning mechanism for the future. If both parties are willing to be fair and reasonable in their negotiations beforehand then a prenuptial agreement would prove to be a useful way of reaching an early resolution in the event of divorce.
What are the cons of having a prenuptial agreement?
Unless you have an understanding with your spouse-to-be, broaching the subject may cause some upset.
Without full and frank financial disclosure by both parties very little weight might be attached to the agreement. It is important to provide all of your financial information before drafting the agreement.
The matter can take some time to negotiate before an agreement is reached, which means you should allow for plenty of time before the wedding to consider this type of matter.
What can and cannot go into a prenuptial agreement?
Most things can go into an agreement. Prenuptial agreements are tailored to the individual couple. Some may want to make provision as to how income, assets and pensions will be divided on divorce, whereas some may wish to stipulate just how the assets are divided and leave the rest to be determined on divorce.
It can also be used almost as a ‘living together agreement’ whereby it can provide as to how assets and accounts can be managed during the marriage.
Will the agreement be legally binding?
Prenuptial agreements are not formally legally binding. However in recent years case law suggests that if agreements are entered into freely and with a full understanding of the implications then it should be upheld, unless it would be not be fair to hold the parties to their agreement.
The Law Commission has introduced guidance in relation to prenuptial agreements and suggest the following:
- That the parties must each take independent legal advice before signing up to a prenuptial agreement
- Agreements should be entered into at least 28 days before the wedding to avoid ‘undue duress’.
To arrange an appointment to discuss a prenuptial agreement please contact our specialist team.