A Pre-Nuptial Agreement (also known as a Pre-Nup) is a formal written agreement between 2 people made in contemplation of marriage. A pre-nup sets out a couple's agreement as to how they wish their finances to be divided in the event of a later divorce.
Are they legally binding?
In England and Wales pre-nups are not strictly binding however they may be given ‘decisive weight’ by a Court if the agreement is deemed to be fair and certain conditions are met. If done properly and with the benefit of independent legal advice (for both parties) they are as binding as they can be. However, nothing can remove the Court’s jurisdiction to vary a pre-nup in the event of a later divorce.
What are the conditions?
The following are the types of conditions that it is important to fulfil if a pre-nup is to have the best possible chance of being upheld at a later date:
- Both parties to exchange with each other their respective financial circumstances (called financial disclosure);
- Both parties to take independent legal advice from their own lawyers regarding the agreement and its implications and meaning;
- It is good practice to finalise the agreement at least 21 days before any wedding ceremony. This is so there can be no accusations of undue pressure by one party on the other. It is therefore advisable to start the process many months before the wedding as the whole process can take several weeks if not months.
- It is often sensible to build in a ‘review’ clause;
- It is fair and meets both parties’ needs;
- There is no undue pressure or influence;
- There is no fraud or misrepresentation.
Why enter into a Pre-Nup?
A pre-nup can be beneficial where:
- One party has substantially greater capital or income than the other;
- One party wishes to protect assets owned prior to the marriage, including inheritance or family trusts;
- Where a couple want to clearly define what assets they want to share in the event of a Divorce and those which they do not;
- One party or both parties have children from a previous marriage or relationship and wish to protect assets for the purpose of future inheritance;
- One or both parties have a connection with a property in another jurisdiction.
You should not enter into a Pre-Nup unless you intend to be bound by its terms.
At Tanners we also work closely with our Wills, Trusts & Probate team because it is usually advisable to also make a new will at the same time as a Pre-Nup.