Article

The power of a pre-nuptial agreement … and the problems that could be posed without one

In this article, Sarah French, family lawyer and mediator at Godwins Solicitors LLP, answers some frequently asked questions around pre-nups and explains why it’s not just the Nicole Peltz and Brooklyn Beckhams of this world who need one.

| 7 min read

With the wedding season getting into full swing, amongst all the ‘wedmin’ of finding the perfect dress, organising the church and the venue, planning the honeymoon etc., adding a pre-nuptial agreement (“pre-nup”) into the mix can seem one task too many. Additionally, it is not particularly romantic and may feel counterintuitive at this time and an awkward conversation to bring up. However, taking the time to consider a pre-nup could save emotional distress, animosity, and protect wealth later, if a couple separates or divorces.

What is a pre-nup and why have a pre-nup?

A pre-nup is a contract between a couple engaged to be married or planning to enter a civil partnership.

Having a pre-nup allows a couple to state what would happen to their assets and income if they later split up. This might be particularly important if you have acquired significant wealth pre-marriage, such as business interests, inherited assets or personal injury damages.

If you have significant inheritance prospects, your family may wish you to consider a pre-nup to protect their wealth and keep it within the family. Farmers, for example, often want to ensure a family farm is preserved so it can be handed down to future generations.

Couples re-marrying may have children from their previous marriages who they want to ensure are not financially disadvantaged by their remarriage if it were to end in divorce.

A pre-nup ensures that the couple enters their marriage fully appraised of their financial circumstances.

Having those potentially awkward conversations about money early on can save potential animosity later. It also affords the couple autonomy over the distribution of their assets should they later divorce.

Are pre-nuptial agreements binding?

In recent years pre-nups have become more or less binding. A landmark case called Radmacher v Granatino in 2010 changed the law so that there is a presumption now that a pre-nup will be valid. This was followed by the Law Commission in 2014 introducing the concept of a “Qualifying Nuptial Agreement” or “QNA”. The Law Commission’s report set out a list of criteria which, if satisfied, would mean the nuptial agreement qualifies as a QNA and would therefore be binding.

These criteria are:

  1. It must be contractually valid
  2. It must be made by deed
  3. It must be entered into no later than 28 days before the wedding
  4. The couple must both have received financial disclosure of the other’s assets, pensions and income
  5. The couple must both have received independent legal advice

The Law Commission’s recommendations never became law, but generally, all family lawyers draft nuptial agreements to meet the QNA criteria. This maximises the prospect of such an agreement being valid and enforceable.

If a nuptial agreement leaves a party in a predicament of real need or prejudices the needs of any children, the family court may not order its terms. The court can uphold only part or none of it. Whilst the family court will always have the final say, if you sign up to a pre-nup which meets all the legal criteria you should assume you will be bound by it.

What if the couple has already tied the knot?

The couple may run out of time before their wedding or not wish to consider a pre-nup during their engagement. The option then is to have a post-nuptial agreement (“post-nup”), which is treated the same legally. Of course, once you have already walked down the aisle, there may be less incentive, bargaining power and momentum to have a post-nup which often means a pre-nup is preferred.

A pre-nup should be regularly reviewed. Post-nups can be entered into as the couple goes through different life stages and their circumstances change. For example, upon the birth or adoption of a child, a health issue arising unexpectedly or a redundancy.

What happens when a couple divorce or separate without a pre-nup?

Without a nuptial agreement, the law applicable to dividing any divorcing couple’s assets is very discretionary and based on sharing, fairness, equality and needs.

There is a list of factors set out in the Matrimonial Causes Act 1973 that the court must consider on arriving at a financial settlement, as well as all relevant circumstances. These are as follows:

  • the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future. This includes, in the case of earning capacity, any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
  • the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
  • the standard of living enjoyed by the family before the breakdown of the marriage;
  • the age of each party to the marriage and the duration of the marriage;
  • any physical or mental disability of either of the parties to the marriage;
  • the contributions that each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
  • the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it; and
  • in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

The welfare of any minor children is the court’s first consideration.

Each case turns on its own facts and so no certainty of what will happen can be provided upon a divorce or separation.

What if one of the parties doesn’t want to discuss a pre or post-nup?

This is an awkward conversation for an engaged couple to have. If the discussions become difficult, a neutral family mediator could assist. The couple could also meet with their respective lawyers around a table to discuss matters constructively, potentially with the assistance of a mediator, and/or a neutral family consultant to help provide support and manage any difficult emotions.

Collaboratively trained family lawyers are trained to help to resolve matters amicably. If there are tricky or unusual points of law or cross-jurisdictional issues, barristers could also be instructed to help provide specialist advice. It is far better to get around a table (or a Zoom screen) with the right advice and support early on to keep discussions constructive. This will help avoid potential arguments which could otherwise derail the conversations and make things harder to get back on track.

Take-away messages

To provide as much certainty and autonomy as possible, a nuptial agreement ideally needs to be added to the pre-wedding ‘to-do list’.

Mediation and the collaborative process are the best ways to preserve an amicable relationship, whether when discussing a nuptial agreement, or when resolving matters relating to finances and/or children upon separation or divorce.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

The power of a pre-nuptial agreement … and the problems that could be posed without one

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