Finances continue to be one of the most challenging and contested areas of any relationship, with it being an extremely difficult topic to talk about for couples, especially if each has different beliefs towards spending and saving.
Here, Mark Taylor explores the law surrounding preparing for financial separation in divorce via pre-nuptial agreements and whether it’s worth getting one.
What is a pre-nup?
A pre-nuptial agreement is a legal agreement made between two individuals before their marriage has taken place.
The agreement enables engaged couples to set out and agree how they wish their assets to be divided if they later separate or divorce. Some pre-nuptial agreements also detail how the couple currently arrange their finances and how they will arrange their finances during the marriage.
Why do some couples choose to get a pre-nup?
Essentially pre-nuptial agreements are created to give couples clarification, certainly and protection on where they will each stand financially should they wish to part ways in the future.
The agreements clarify how the parties will conduct their financial affairs during the marriage, to enable the couple – especially the financially weaker party – to have transparency at the start of the marriage. This may also assist the financially weaker party to feel financially secure within the marriage.
Providing certainty for couples who wish to formally agree how their assets should be divided if they later separate or divorce, a pre-nup also protects assets from a later financial claim, such as inherited wealth or pre-marital property.
On the other hand, the agreements can limit scope for uncertain, emotionally draining and financially costly court proceedings in the event of the future breakdown of the marriage.
Am I fully protected with a pre-nuptial agreement?
As pre-nuptial agreements are not currently legally binding in England and Wales, the parties to a pre-nuptial agreement cannot override the court’s broad discretion to decide how to redistribute their assets and income on an application for financial remedy.
When considering an application for financial remedy, the court must, however, give appropriate weight to a pre-nuptial agreement as a relevant circumstance of the case when considering the factors set out in section 25 of the Matrimonial Causes Act 1973 (MCA 1973). It may be that a pre-nuptial agreement should be given decisive weight, but this will depend on the circumstances of the case.
Who should get a pre-nup?
Despite this, pre-nups are increasingly widely used, particularly amongst people marrying later on in life for a variety of reasons including focus on career and economic uncertainty. By the time people marry, they often have pre-marital property that they want to protect.
As divorce rates continue to rise, those entering second or third marriages may select a pre-nup as a way to protect children from previous marriages, in addition to pre-marital assets, while people are also moving between countries more frequently and forming relationships in countries where nuptial agreements are more commonplace.
Qualifying agreements
To be a qualifying pre-nuptial agreement, the agreement must comply with certain criteria including:
- It must be contractually valid
- It must be validly executed as a deed
- It must not have been made within the 28 days immediately before the wedding or civil partnership ceremony
- Both parties to the agreement must have received disclosure of material information about the other party’s situation when they entered into the agreement
- Both parties must have received legal advice at the time they entered into the agreement
For further advice on pre-nups, call Mark Taylor on 0161 761 4611, or email him at Mark.Taylor@whnsolicitors.co.uk
