Prenuptial agreements are not a recent development; they have existed for a significant period and are widely accepted in many parts of the world. Research conducted by Scottish Widows in the UK indicated that 56% of individuals who are not yet married would contemplate entering into a prenuptial agreement.
42% of marriages end in divorce
What is a prenuptial agreement?
A prenuptial agreement, often referred to as a prenup, is a document created by a couple to outline their intentions in the event of a relationship breakdown, particularly concerning financial matters.
Why do you need a prenup?
Unfortunately, not every marriage endures. Statistics from the Office of National Statistics (ONS) reveal that 42% of marriages in England and Wales conclude in divorce, with an estimated 34% of marriages expected to end in divorce by the 20th wedding anniversary.
The media often covers stories about celebrities who opt for prenuptial agreements and those who do not. For instance, Britney Spears, with an estimated net worth of $120 million, reportedly gave dancer Kevin Federline only $1 million in their divorce due to a well-established prenup. Conversely, Sir Paul McCartney’s decision not to have a prenup with his then-wife, Heather Mills, allegedly cost him £24.3 million.
Prenuptial agreements, or prenups, are documents prepared by couples to outline their wishes in the event of a relationship breakdown, particularly focusing on financial matters. Despite their prevalence in media coverage, prenuptial agreements are not widely used in the UK. This may be due to historical doubts about their legal enforceability. However, a Supreme Court case in 2010 (Radmacher v. Granatino) indicated that in certain circumstances, a prenup could carry substantial weight in a divorce settlement.
Although many divorces handled by DLS Solicitors are resolved amicably and affordably, there are instances of ordinary couples spending significant sums on legal fees to settle financial matters during divorce. According to a report in The Telegraph (The Hidden Costs of Divorce), the average expenditure on legal fees for divorce is quoted at £44,000.
Creating a water-tight prenuptial agreement minimises the likelihood that you will suffer this kind of financial cost.
Prenups in the UK
Prenuptial agreements are relatively uncommon in the UK currently, possibly due to historical doubts about their legal enforceability. However, a significant shift occurred in 2010 with the Supreme Court case of Radmacher v. Granatino, which signalled that, in appropriate circumstances, a prenup could carry considerable weight in a divorce settlement.
Creating a water-tight agreement
If you are considering a prenup, it’s crucial to understand some important aspects. While prenuptial agreements are not entirely binding on a divorce court, recent case law has established that, when properly executed, they hold substantial weight in legal proceedings.
To ensure your prenup is binding, it’s essential to address the following five points:
The prenuptial agreement is entered into freely
- The prenuptial agreement must be entered into freely and voluntarily, without any undue pressure from either party or third parties.
- The agreement should be negotiated well in advance of the wedding and finalised at least 28 days before the wedding date.
- The court will take into account individual circumstances, including the age, maturity, previous relationship experiences, and emotional states of both parties at the time the agreement was made.
The implications of the agreement are fully understood
Both parties should have a complete understanding of the implications of the agreement before signing it. This includes having all the necessary information to make an informed decision about entering into the agreement. Additionally, both parties should seek specialised family law advice regarding the terms and implications of the agreement.
The agreement is fair
The agreement may be deemed unfair if:
- It fails to adequately meet the reasonable needs of any child.
- It leaves one party with less than they require, while the other is sufficiently provided for.
- There is a significant and unforeseen change in circumstances, such as one party losing all their assets or becoming severely disabled.
- One party has a compelling case for compensation (e.g., loss of earnings due to a joint decision to sacrifice a career to care for the family), and a prenuptial agreement that disregards this compensation aspect may be considered unfair.
The agreement accounts for your children
The agreement must ensure that suitable financial provisions are made for any children you have together, whether these children were born at the time the agreement was created or are born during the course of your marriage.
There are arrangements for regular reviews
As the duration of a marriage extends, the likelihood increases that the terms of a prenuptial agreement may no longer be fair. Therefore, it is advisable to commit to regular reviews of your prenup and update it if circumstances change, such as after the birth of a child, the sale of a business, job loss, or inheritance.
Prenuptial agreements are growing in popularity, particularly with a significant number of second marriages and couples entering relationships with their own assets. Obtaining a prenup is a prudent choice, but it’s crucial to seek guidance from a specialised family lawyer to ensure the agreement is drafted correctly and to receive ongoing advice throughout the process.
Legal Advice
We can assist by:
- Providing initial advice on the benefits of a prenuptial agreement and clarifying its legal standing.
- Drafting a prenuptial agreement tailored to your needs.
- Offering guidance on the implications of a prenuptial agreement drafted by a third party.
- Reviewing and updating prenuptial agreements to reflect changes in circumstances.
