Pre-Nuptial Agreements
If you are engaged, or considering marriage, you need to understand the potential legal implications.
Should you decide to live together first, you will have few rights as a cohabitee, so you may need to consider how to structure matters during this period.
Marriage is a binding contract, with financial obligations to each other for life, or until a financial order is made by the court ending these.
If you have assets that you consider to be your own, you can take steps to protect these. We look at some of the legal aspects of engagement and marriage, and steps you can take to reduce the risk of misunderstandings and disputes.
Pre-Nuptial Agreements
A pre-nuptial agreement is an agreement that is entered into prior to marriage to decide what would happen to any assets in the unfortunate event of a separation or divorce in the future.
Are Pre-Nuptial Agreements Legally Binding?
Although a pre-nuptial agreement is not legally binding in the way a court order is, there are some steps you can take when preparing the agreement to ensure that it can be upheld by a court in future. The law surrounding pre-nuptial agreements has developed following the Supreme Court decision is Radmacher v Granatino in October 2010, which set out the relevant factors that the agreement would be tested against.
In a financial claim on divorce, a judge must consider the relevant factors under Section 25 of the Matrimonial Causes Act 1973. A pre-nuptial agreement cannot override the needs of the parties in the event of a marital breakdown. A prenuptial agreement also cannot prevent either spouse form applying to the court to make financial provision for them, although the other party may seek to rely on the agreement if proceedings are issued.
Future Proofing a Pre-Nuptial Agreement
To give your agreement the best chance of being valid in future, it is imperative that both parties enter into the agreement freely, without any pressure from the other party or any third parties such as family members. You should feel like you are on an equal footing with your partner, and able to negotiate terms that work for both of you. Both parties should have a full appreciation of the implications of the agreement they are signing.
In 2014, the Law Commission published a report entitled Matrimonial Property, needs and Agreements, within the report, they recommended legislation surrounding pre-nuptial agreements and set up certain criteria that an agreement would need to meet to be called a qualifying nuptial agreement.
The criteria for qualifying nuptial agreements are:
- The Validity Requirement, the agreement must be contractually valid, with no factors that could cast doubt over the free will of the parties agreement, i.e. no duress, mistake or misrepresentation.
- The Formation Requirement, the prenuptial agreement must be executed correctly as a deed with the relevant statement signed by both parties confirming they understand the agreement and the implications of signing.
- The Timing Requirement, it must be signed at least 28 days prior to the wedding.
- The Disclosure Requirement, there must have been proper disclosure of all assets by both parties when entering into the agreement.
- The Advice Requirement, both parties must have received legal advice at the time they entered into the agreement.
As well as the above, the agreement must not prejudice any children, if an agreement makes insufficient financial provision for children it will be set aside by the court. It is also a requirement that the agreement meets both parties financial needs.
It is recommended that once married, couples review their agreement with some regularity, but especially after certain trigger events, such as the birth of a child, or bankruptcy. If you have a long marriage without reviewing your pre-nuptial agreement, it is not likely to be qualifying under the Law Commission’s recommendations.
Ringfence Assets
Most agreements will seek to ringfence certain assets that one party is bringing into the marriage, these are sometimes referred to as non-matrimonial assets and are most frequently a property owned in their sole name, or substantial savings.
Whilst there is nothing inherently unfair about this, it is important to understand that the court will treat any property lived in as the family home different to other assets, and you should seek specific advice on this if you intend to live in a property that is owned in either parties’ sole name, which is ringfenced as part of your pre-nuptial agreement. The overall goal should be to ensure that both parties needs are met on the breakdown of the marriage.
If you would like us to draft or advise on a pre-nuptial agreement, you can contact us by phone on 0800 015 0340 or by email on family@chadlaw.co.uk to set up a free of charge 30 minute consultation by phone.
