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With the uncertainty over financial arrangements when a marriage comes to an end, couples are increasingly looking to take control over their financial arrangements at the outset of the relationship. This is particularly the case where one party to the marriage brings in greater wealth, or where it is subsequent marriage for either. Discussing financial issues can be one of the most difficult aspects of marriage and entering into hopes and fears at the beginning can actually improve communication and therefore, one’s relationship.
Nuptial agreements, where properly prepared and implemented, are an excellent means of outlining the financial arrangements should a marriage come to an end. It is important to get things right and, in this guide, we provide a summary to get you started.
What is a nuptial agreement?
A nuptial agreement is a formal, written, agreement between two partners entered into during their marriage (a post-nup), or in contemplation of their marriage (a pre-nup). The agreement sets out the ownership of their respective belongings (including money, assets and property) and explains clearly how it will be divided in the event of the breakdown of their relationship.
The agreement can also deal with other issues, including financial provision for children, gifts and inheritance, and how to vary the agreement during the marriage.
Are nuptial agreements legally binding in England and Wales?
Nuptial agreements are not legally binding, and cannot be enforced as a contract. However, when considering the suitable financial arrangement upon a breakdown of the marriage, it is very likely that the court will take the agreement into account and hold the parties to the terms as long as:-
- it has been entered into freely by the parties, with sufficient time before the marriage to consider the agreement;
- the parties have had the benefit of independent legal advice; and
- there has been sufficient financial disclosure to enable the parties to make an informed decision.
- it has been reviewed on a regular basis (say between 5-7 years)
- there have been no significant changes such as serious ill-health/injury or the birth of a child.
In these events, the Court can elect to disregard the Agreement in favour of determining what is considered to be appropriate in all the circumstances.
Should I have a nuptial agreement?
There are a number of reasons why you might think about getting a prenuptial agreement, with the following being some examples of situations where the parties could benefit from having one:-
- Either party to the marriage has children from a previous relationship and want to ensure certain assets are reserved for them in order to protect their inheritance rights. (You should also consider making a will for the same reason).
- Either party want to protect present or future inherited money or assets.
- Either party owns a business which they would wish to retain control of in the event of separation.
- There are assets and/or property that would be hard to split equally.
- Either party wants some say in how financial issues would be resolved in the event of a marriage breakdown (especially if they have suffered unfairness in divorce courts previously).
- If either party has outstanding debt or there is a worry about the risk of future debt, a prenuptial agreement with a ‘debt clause’ can protect you from being liable for that debt as against the other party (this will not of course protect you against creditors seeking recovery against that party’s interest in a jointly owned property).
What should be included in a nuptial agreement?
The nuptial agreement can detail how your property, including land, investments, pensions and income, is intended to be dealt with following the breakdown of a relationship. In order to demonstrate what each party had at the time of the marriage, each party will provide information as to the nature and value of their property, and income, at that time.
It may also set out post-divorce financial arrangements for children, particularly in marriages where one or both partners already have children from previous relationships. It bears repeating that, in deciding whether to apply the terms of a nuptial agreement, the courts will pay particular attention to any matters relating to children and are unlikely to support any terms in the agreement that are deemed to be harmful to the interests of a child.
If you have any further questions about nuptial agreements, or require assistance preparing an agreement, or reviewing one that you have been presented with, please contact a member of our Family Department who can assist.
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If you would like a no obligation discussion, please feel free to contact us either by phone on 02920 345511 or emailing us below.