Are you prepared for the future?
Congratulations! You are getting married.
The bride’s dress and groom’s outfit have been found, the guest list prepared, cake ordered and venue booked. The long-term weather forecast is warm and sunny. What about your prenup?
How can you prepare yourself if your marriage breaks down?
Sadly, it is impossible to say with any real certainty that you will still be together in three, five or 15 years’ time. Current statistics show a marriage now lasts, on average, 11.2 years with as many as 42 per cent ending in divorce.
While it may be the last thing on your mind when you are preparing for your big day, it can pay (literally) to have a prenuptial agreement in place before you marry, to protect you in the event of divorce.
Before you consider attending to this aspect of the ‘wedmin’, you will undoubtedly ask:
What is a prenuptial agreement?
In short, a prenup works much like a contract. You and your future spouse sign a document in which you have agreed how your assets and income should be divided between you on divorce. It can cover a number of scenarios according to which the assets are divided differently. For instance, according to whether or not there are children and/or for how many years you have been married. The key benefits of a prenup are giving a couple clarity and security at the outset of a marriage and protection from a later financial claim. You can choose to agree in it how you will manage your finances during your marriage, as well as give yourselves as much certainty and control as possible about how your assets should be divided on a divorce.
A prenup also limits the scope for uncertain, emotionally draining and extremely expensive court proceedings. It is, in short, a nice and tidy way of saying exactly what is to happen to your country cottage, £4k television, fancy sports car and American-style fridge freezer, without all the legal kerfuffle in-between.
It sounds like a win-win situation, but…
Are these agreements really worth the paper they are written on?
Yes, they are.
It is important to note that prenups are not formally legally binding i.e. they cannot override the court’s broad discretion to divvy up and award the matrimonial assets as they see fit. However, a recent judgement from the Supreme Court has determined that the court should give effect to a prenup that has been entered into freely, with each party being aware of the implications of the agreement, unless it would be unfair to hold the parties to the agreement.
If you are looking to enter into a prenup with your spouse-to-be, follow these three stages:
- Make sure you are both entering into the agreement of your own free will; if there is any sign, indication or evidence of undue pressure or influence (“I’m sorry Gemma, but if you don’t sign this agreement, I will not be marrying you, end of!”) the court will be unlikely to hold you to the agreement;
- Make sure you are both giving full information about all of your current assets. If it turns out, on your divorce, that you did not disclose your £500,000 pension pot or your holiday cottage in the Dordogne, this will invariably work against you. Be honest and upfront about what you own and detail all of this in the agreement;
- Get legal advice! If both parties have obtained legal advice, this is a good indication both parties are fully aware of the implications of the agreement.
Do I really need one?
This depends. A well-drafted, effective prenup can save much time, money and heartache in the future.
However, the need and desirability for an agreement is relative to your assets. In short, the more assets you have, the greater the need and desirability for certainty as to how these assets would be treated upon divorce.
This article first appeared in Wealden Times.