We want prenup! (Do we?)
Jemma Wentworth looks at the conditions of a prenuptial agreement
A prenuptial agreement is a contract that both intended spouses will enter into before the marriage takes place. Its purpose is to clearly define the intended long-term ownership of one or both spouses’ assets in the unfortunate circumstance that the marriage should end in divorce. In essence, you are setting out who gets what – but there is a little more to it than that.
Prenups for all
It is commonly misconceived that prenups are only for the rich and famous; those of high wealth wanting to protect their fortunes. In reality, prenups are not necessarily intended for the very wealthy.
A prenup can serve a vital role for couples where there is a vast disparity in wealth. This circumstance automatically means that the more affluent spouse stands to lose a lot more than the other.
A prenup may also be useful when one or both spouses do not have any significant existing wealth prior to marriage, but are expecting significant future wealth. This could be increased earnings through career progression, a financial investment or inheritance. A prenup in these circumstances could be used to ringfence those future assets and ensure they remain in the possession of the individual who acquired them in the event of a divorce.
In addition, it is becoming more common for people of retirement age to remarry and they may wish to protect their assets. This is particularly prevalent for those who may be intending to leave any fortunes to children as inheritance. A prenuptial agreement can protect such savings or assets from being divided in a divorce settlement.
Of course, not everyone has significant wealth or assets that they would want to protect. However, this does not necessarily mean a prenuptial agreement is not required. A divorce is always unpredictable, with litigation commonly adding even more acrimony to an already acrimonious situation. Having a prenup can simply be seen as a sensible way to set out future intentions should the marriage come to an end.
At the time of agreeing a financial settlement when going through a divorce, the judge will still have to approve any financial arrangements and ensure the financial requirements of each spouse are met, commonly by cross referencing the terms of the agreement to that of the terms set out within the prenup. Please note, it is impossible to fully predict how a judge may rule on a financial settlement, therefore having a prenuptial agreement is a great way to avoid uncertainty.
In order for a prenuptial agreement to be considered valid and binding, both parties involved must seek independent legal advice regarding the full contents of the document to ensure it is fair and lawful. However, prenups are not enforceable in family courts under English law.
At the end of the day, let’s not forget it’s a legally binding contract. A judge is therefore likely to uphold the agreement providing that it was executed and signed with the correct considerations and precautions, both spouses obtained relevant legal advice, and there are no other issues.
Important points of reference are to make sure the prenuptial agreement is written up correctly and, over and beyond everything else, it must be fair. When looking at the actual topics to consider, these are wide ranging and without limitation. Clauses can include the family home, money, debts, children, property, inheritance or trust amongst many other factors.
All prenuptial agreements must be signed before the marriage takes place. If a couple enters into marriage and thereafter decide they want protection, similar to that offered by a prenuptial agreement, they can sign a postnuptial agreement instead. However, these can be easily overturned by a judge through the course of a divorce proceedings as it is widely appreciated that financial circumstances invariably alter throughout the duration of the marriage in any event.
Another very valid question to ask is can I change my mind afterwards? The important factor here is whether there is justification for the prenup to be reviewed or amended. This can only be considered if the circumstances of the marriage change. In essence, the terms of the prenup must always remain reasonable and fair in all occasions and circumstances.
Jemma Wentworth is a lawyer at Nicholson Jones Sutton Solicitors: njslaw.co.uk