Anita Shepherd – head of Family Law – discusses pre-nuptial agreements.

“Pre-Nups” are certainly becoming more popular in the UK.  Only recently we reported an increase in enquiries about such agreements.  This was reinforced when Family Law Week confirmed that one in ten married people regret not making a pre-nuptial agreement.  It might be the influence of celebrities or simply due to the fact that financial circumstances for a soon-to-wed couple are significantly more complicated now than in years gone by.  Either way, they are becoming increasingly relevant and it is important that couples at least think about whether they need such an agreement before marrying.

In 2014, the Law Commission published a report that recommended making nuptial agreements enforceable contracts.  The Government is in the process of reviewing the recommendations and will be publishing a response in the near future.  The House of Commons Library published a standard note on pre-nuptial agreements in 2015, confirming how such agreements are currently being dealt with by the courts and how they may be dealt with in the future.

What is a Pre-Nup?

A pre-nuptial (or pre-marital) agreement is an agreement made by a couple before they marry or enter into a civil partnership, which sets out how they wish their assets to be divided if they should ever divorce or have their civil partnership dissolved.  The agreement may be updated after the marriage or civil partnership as the couple’s circumstances change.

What does the law say about Pre-Nups?

Pre-nuptial agreements are not automatically enforceable in courts in England and Wales, but the courts have recently been paying more attention to such agreements when deciding how to divide assets at the end of a marriage or civil partnership.  The main case in this area remains to be a case from 2010, in which the Supreme Court held that the courts should give effect to a pre-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 their agreement.  This now stands as good law, and provided the parties have made full disclosure – and both understand the implications of the agreement and have had independent legal advice – then one can expect the terms of the pre-nuptial agreement to be upheld by the court if challenged by one party.

What are the benefits of having a Pre-Nup?

If a couple do not enter into a pre-nuptial agreement and the marriage or civil partnership then breaks down, the couple faces the difficult task of trying to divide assets fairly at a time when communication between the parties may be at an all-time low.  If the couple cannot reach an agreement then they will need to apply to the court, which has very wide discretion in deciding how best to divide the assets.  The process can be long, frustrating and very costly.  If the couple have a pre-nuptial agreement in existence, then it can serve as a very useful point of reference that will encourage a more amicable agreement and even avoid the need to go through the lengthy court process.

Reasons for couples not entering into a Pre-Nup

The other partner ‘refusing’ to enter into a pre-marital contract is the biggest reason for not having one.  No one would consider it very romantic when you are in the throes of planning a wedding!  Other reasons given are that they were too ‘nervous’ to ask their husband or wife for fear it would damage their relationship, while many people simply don’t know how to go about arranging one and believe that they are only for the rich and famous.  It is really about educating couples of the relevance of a pre-nup and for this to be done when the parties are registering to get married.  If the couple look on the agreement as a type of insurance then it may save a lot of legal costs and heartache later on down the line.

Should couples enter into a Pre-Nup?

Couples thinking about entering into a pre-nuptial agreement should not be deterred about what they may have heard about in the news or the prospect of it not being enforceable.  The fact is that couples today are marrying at an older age than in previous generations; by which time the individuals have accumulated their own personal wealth and assets.  Indeed couples may be entering into their second, third or even fourth marriage and wish to protect pre-marital assets for children born out of previous relationships/marriages.  If the couple do face separation, then the agreement can be extremely helpful to help harness the couple at a difficult time and be used as a template for reaching an agreement more amicably.

Should you require any further information about Pre-Nups, please contact Anita Shepherd or her colleagues, Laura Johnson and Kirsty Morbey on 0161 832 3304.

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