What is a nuptial agreement?
A nuptial agreement is a written agreement between spouses setting out what should happen if they divorce. In most cases, this includes ring fencing certain assets that are currently owned by one party, or future gifts and inheritances they are likely to receive, thereby protecting them from being shared with the other spouse on divorce. The agreement can also set out the minimum financial provision that will be made for the financially weaker spouse and children of the family (such as buying them a suitable home, paying for school fees and spousal maintenance), thereby providing both parties with security and peace of mind.
A prenuptial agreement (‘prenup’) is when the agreement is signed before the wedding date; a postnuptial agreement (‘postnup’) is when the agreement is signed any time after the parties have married. Some people may even have both a prenup and a postnup, particularly if there has been a substantial change in their circumstances since the original agreement was signed. Postnups and prenups are treated in the same way by the courts of England & Wales.
Are prenups and postnups enforceable?
Nuptial agreements are not currently binding on the Family Court of England & Wales, however the court has confirmed that an agreement that is freely entered into by spouses with a full understanding of the implications of the agreement should be upheld unless it is unfair at the time of the divorce to do so. As such there are some crucial factors that provide the best chance of agreements being upheld, and our specialist lawyers can ensure that these are met.
Who would benefit from a nuptial agreement?
Those most likely to enter into a nuptial agreement include people who:
- have inherited or are highly likely to inherit substantial wealth – often these people are encouraged to seek a nuptial agreement by family members
- have worked extremely hard to build up an asset portfolio, pension pot or business and want to preserve the same
- have been married before and want certainty going into their next marriage, and to preserve wealth for the benefit of the children from their previous marriage.
- have ties to another country or countries, whether they are a national of another country, have offshore assets or are living overseas. Nuptial agreements are much more commonplace in other jurisdictions and can be automatically binding if a divorce takes place there instead of in England & Wales. The nuptial agreement can try to pin down which country will have jurisdiction on divorce and choose which country’s laws will be applied.
What happens if I do not have a nuptial agreement?
The Family Court has a very wide discretion to decide how assets should be split on divorce. Without a nuptial agreement, there is much greater scope for arguments between spouses on divorce as to which assets are marital or non-marital and therefore what they should share between them. There is also more likely to be an argument as to what constitutes their reasonable needs. This all leads to greater stress, and higher legal costs. More concerningly, without a nuptial agreement, assets brought into the marriage by one party might end up being shared with their spouse, and needs may be interpreted much more generously than the parties would agree at the outset of their marriage.
Therefore, for those getting married (or who are already married) with unmatched current and prospective wealth, a nuptial agreement is a very worthwhile insurance policy.
The family law team at B P Collins can advise on and draft an agreement to provide peace of mind for the future.
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