A ‘Prenup’ is a legal agreement entered into between a couple before they get married; it sets out what their rights in relation to property, business, debts and other assets are and it stipulates what will happen to their ‘financial relationship’ should the marriage breakdown.
It is far more common for couples in the US to enter into these types of agreements then it is in the UK.
Is a prenuptial agreement worth thinking about?
Prenuptial agreements can be a good mechanism to help protect a business interest you have, inherited property you may have received, property that you would like to pass on to your children or assets acquired before you met your partner.
Context is always good for illustration so let’s imagine that before you met your partner you had started a successful business. With some of the profit from your business you’d been able to invest in property and now owned two buy to let properties. Your partner has a steady career and before meeting you, owned their home outright. A prenuptial agreement could stipulate that you should both walk away from the marriage with those assets you came to it with. If you owned any asset jointly with your partner before or after marriage then the agreement could also set up how those assets should be divided.
You might think that this sounds like common sense but the line between assets owned in one person’s name becomes blurred as individuals can make a range of financial claims against each other on the breakdown of the marriage.
Are prenuptial agreements now worth the paper they are written on?
Yes, if done properly. Whilst still not 100% legally binding there has been a significant shift in attitude by the Courts towards them and the expectation now is that you should be prepared to be held to the agreed terms. Consult a specialist Family Law Solicitor at an early stage if you are thinking about entering into a prenuptial agreement as there are certain key criteria which should be satisfied to ensure that the agreement carries as much weight as possible. For example both individuals should take independent legal advice on the terms of the agreement and the agreement should only be entered into once you have seen information about each other’s financial situation.
Prenuptial agreements won’t be for everyone but it could be worthwhile exploring.