A Pre-Nuptial Agreement (often referred to as a "pre-nup") is an agreement entered into by a couple before their marriage setting out what should happen in relation to financial matters in the unhappy event of a divorce.

In the UK (England and Wales) pre-nups operate as a form of wealth protection.

They are particularly recommended and are most likely to be effective in situations such as:

  • Second marriages between mature parties who want to preserve their pre-acquired wealth for the benefit of the children of the previous marriage(s)
  • Where one party has substantial pre-acquired wealth.
  • Where one or both of the parties wish to ring fence inheritances they expect to receive.
  • Marriages where there are substantial trust assets, especially those derived from gift or inheritances.

People who sign pre-nups are choosing the certainty of setting out in advance what should happen to their finances if they divorce, rather than incurring the financial and emotional costs involved in leaving it to the court to decide in that unhappy event.

Are pre-nups enforceable in the UK?

Pre-nups are not strictly enforceable or legally binding in the UK (England and Wales). Unlike a commercial contract you cannot sue on a pre-nup and there is always the possibility that if the marriage breaks down the court will not uphold the terms of the pre-nup.

On divorce the court has very wide discretionary powers to distribute family assets as they see fit, so as to bring about fairness between the couple.

A pre-nup is one of the circumstances the court will take into account when exercising its discretionary powers.

Whilst not strictly enforceable a properly prepared pre-nup should give a large measure of protection to the economically stronger spouse and could be totally effective on the breakdown of the marriage.

The main point of principle is that "The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement".

In order for a Pre-Nuptial Agreement to have the best change of being upheld by the court if it is subsequently challenged on the breakdown of a marriage, it is sensible to observe good practice by trying to ensure that it is fair. MTG solicitors can guide you through this process, we can assist with the process of negotiating the agreement and the substance of the agreement.

Good practice should include some or all of the following considerations:

Legal advice

  • Both parties need to obtain separate independent legal advice before entering into the agreement to ensure they understand what they are agreeing to.
  • Usually the economically stronger partner will pay the legal fees of the economically weaker partner.

Financial Disclosure

  • Both parties need to provide disclosure of their financial circumstances.
  • These are usually summarised in schedules attached to the pre-nup i.e. income and assets
  • Listing the financial assets at the outset of the relationship makes it less likely that one party can accuse the other of concealing his or her assets later on.

Timing

  • Both parties need to have enough time to consider and reflect on the terms of the proposed pre-nup, with the benefit of the legal advice they both receive.
  • It is best not to leave it too close to the wedding date which may make it less likely that the court will uphold the pre-nup.
  • Couples who leave it close their wedding date may be best advised to start their discussions for their agreement but sign a post-nup after the date of the wedding, rather than rushing into signing a pre-nup on the eve of the wedding.

No Duress or Undue influence or Misrepresentation

  • Factors which would result in a commercial contract being invalid would almost certainly operate in the same way in relation to a pre-nup.
  • Both parties must enter into the pre-nup freely and not as a result of improper pressure or exploitation of a dominant position by the other.

The agreement must be Fair : Reviewing the pre-nup

  • Fairness will be judged at the time of the breakdown of the marriage and involves some thinking about what will happen during the marriage and changes of circumstances that may or may not take place.
  • This can be dealt with by way of regular periodical reviews of the Pre-Nup which can be helpful.
  • Reviews to deal with events such as involuntary loss of employment, illness or disability which affect ability to work should be included.

International aspects

  • Consider the need to take legal advice from foreign lawyers in the case where the you may live abroad.
  • It may be necessary to have a separate pre-nup in each of the countries where you may live or at least to have expert advice as to the requirements of pre-nups in each of those countries.
  • You may need advice from your tax or private client advisers in relation to the pre-nup and your upcoming marriage.

New Wills

Marriage automatically revokes any existing Will unless prepared in contemplation of it. Both parties will need to make new Wills to reflect their changed status and the terms of their proposed pre-nup.

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