A prenuptial agreement is a contract signed by couples before they are married that outline how assets will be divided if they get a divorce in the future.
Although they aren’t automatically legally binding, they do carry a significant amount of weight. This is why it is essential you understand how they work before you and your partner jump straight into creating one.
Key Points:
Prenuptial agreements are often used to protect property, investments, inheritance, trust funds and even assets you wish to leave to your children in the future.
The agreements are not automatically legally binding in England and Wales, but they are taken into serious consideration by the courts.
What is a Prenuptial Agreement?
A prenuptial agreement, commonly known as a ‘prenup’, is a legal document created between a couple before they are married, outlining how their assets will be divided if they get a divorce in the future. Assets usually include capital, property, pensions, and debts.
The agreement helps to avoid any financial surprises if the relationship was to break down in the future.
Is a Prenuptial Agreement legally binding?
No, prenuptial agreements are not legally binding; however, it is a common misconception that they are.
Despite this, in England and Wales, they are becoming increasingly accepted by the courts as proof of a couple's intentions if they were to get a divorce.
In 2014, the Law Commission published a report called ‘Matrimonial Property, Needs and Agreements’, which outlined a prenuptial agreement to be made enforceable if certain requirements are met:
The agreement must be contractually valid and entered into freely and willingly by both parties.
The agreement must be signed by both parties
The agreement must not have been made within 28 days immediately before the marriage.
At the time of the agreement, both parties must have received full disclosure about the other party's financial situation.
Both parties must have received legal advice at the time of the agreement.
The terms of the agreement must not prejudice the requirements of any children involved.
How Prenuptial Agreements work legally
The main purpose of a prenuptial agreement is to provide clarity for couples around how their assets would be split if they get divorced in the future. There is no right or wrong way for a prenuptial agreement to be written, and the exact details will vary depending on your case.
The agreement takes effect when it is signed by both parties prior to their marriage. The marriage must therefore take place in order for the prenuptial agreement to take effect and protect certain aspects of each party.
If you and your partner do decide to get a divorce later down the line, the prenuptial agreement will be used to outline the division of assets since they have already been agreed upon. This can massively help to speed up the divorce process since you won’t need to spend a huge amount of time creating financial settlements.
How are Prenuptial Agreements decided on?
Prenuptial agreements are decided on by both parties outlining their expectations and concerns with the assistance of expert legal advice. This often involves discussions around the division of assets and how finances will be managed during the marriage.
Couples can choose to use mediation in order to help facilitate conversations, but it is highly recommended that each party has their own solicitor to ensure their interests are adequately represented.
Once the terms are agreed upon, the prenuptial agreement is drafted by a legal professional. This draft can then be reviewed and revised where necessary until both parties are happy with a final agreement.
When do you need to make a Prenuptial Agreement?
A prenuptial agreement should be signed at least 28 days before the date of the marriage, with all the assets owned by each party being disclosed in the agreement.
We highly recommend you and your partner begin creating your agreement well in advance of the date of your marriage to ensure there is sufficient time for discussions and to avoid any suggestion of coercion.
What can be included in a Prenuptial Agreement?
A prenuptial agreement must contain full details of all assets, pensions, incomes and liabilities.
Items and assets that should be included in prenuptial agreements are:
- Properties
- Savings and details of all bank accounts
- Premium bonds
- Inheritance
- Stocks and shares
- Investments
- Pension pots
- Income
- Business interests
- Trusts
- Debts
To find out more about what to include, you can read our full guide on what can and can't be included in a prenuptial agreement.