Pre-nuptial agreements are not just for the rich and famous! An increasing number of couples are deciding to enter into ‘pre-nups’ before their big day. What are they? A pre-nuptial agreement is a formal agreement entered into by a couple preparing for their wedding.  The agreement sets out the assets owned by each party prior to the marriage and records how those assets are to be divided between the parties in the event of a divorce. How can they help parties? Where parties have considerable inherited wealth or substantial assets acquired independently before their relationships, pre-nuptial agreements can help to ring-fence these items and protect them in the case of a divorce. By entering into a pre-nuptial agreement, parties can discuss their finances freely with each other at the outset, with a view to reaching an amicable agreement about how those assets should be treated in the event of a divorce.  This could have the effect of avoiding contested court proceedings later on, which can be lengthy and stressful, not to mention expensive! Are they legally binding? Pre-nuptial agreements are not legally binding in England and Wales, in the sense that a Judge can overrule the agreement in court proceedings.  However, Judges will consider pre-nuptial agreements carefully when deciding how to treat the marital assets in a divorce and tend to view agreements as a good indication of the parties’ intentions when they were preparing for marriage.  Therefore, Judges will require much persuasion if one party to the agreement feels that it should no longer be upheld! Indeed, in the recent landmark case of Radmacher v Granatino, handed down by the Supreme Court, it was held that the Court will attach considerable weight to the agreement, which will be binding on the parties unless:

• The agreement was not entered into freely by the parties
• The parties did not fully understand and appreciate the implications of the agreement when signing it.
• It would be unfair to hold either party to the agreement.

How can you ensure that pre-nuptial agreements will be upheld by a court?

1. Both parties should obtain independent legal advice.  This proves that they have understood the implications of the agreement they are entering into.
2. Providing full and frank financial disclosure of your assets and income. This will serve to demonstrate that parties were fully aware of the other’s finances at the time of entering into the agreement and therefore understood the implications the agreement would have on these finances.
3. The agreement must have been entered into voluntarily.  There must be no evidence of duress or undue pressure prior to entering into the agreement.  A way to avoid this is to allow plenty of time to pass between entering into the agreement and the wedding date.
4. The agreement must be fair for both parties.  If the agreement weighs too much in favour of one party, thus resulting in the other’s financial hardship upon divorce, it is less likely that the agreement will be upheld by a court.
5. Review dates! Agreements should be reviewed at some point after the marriage has taken place.  This can be after a few years i.e. 5 years, or upon the occurrence of a particular event i.e. the birth of the parties’ first child.  Where agreements have not been reviewed and the circumstances of the couple have changed considerably, such as upon the birth of children, the agreements are less likely to be upheld at court.

At stevensdrake, our Family team has expertise in both drafting and advising on pre-nuptial agreements.  Clients can then enter into an agreement with the peace of mind in knowing that the agreement is not only fair, but will give them the financial protection they desire! For more information on this article, or to make an appointment regarding a pre-nuptial agreement, please contact Peter Alison on 01293 596935.This article is provided for general information only. Please do not make any decision on the basis of this article alone without taking specific advice from us. stevensdrake will only be responsible for the advice we give which is specific to you.