Prenuptial Agreements: A Sensible Idea
Prenuptial agreements have been commonplace in the US for many years and were put in place to protect those entering into marriage, in particular those who already had substantial assets before becoming eloped. Here in the UK, prenuptial agreements are still quite rare but growing in popularity. The reasons for this are quite complicated but include the fact that more people are marrying later and have already purchased a home prior to the marriage, and also the fact that many people already have children from a prior relationship before they married. If either of these things applies to you, a prenuptial agreement should be a consideration.
In 2009, a case involving a German heiress and her ex-husband was the first to take a prenuptial agreement into account by the UK courts. It was found that the woman was protected by the agreement due to the fact it was freely entered into by both parties. This case led to the courts being able to give equal weighting to the agreement when deciding on the division of assets. It was found that the agreement was entered into with both parties believing it would come into effect should the marriage break down.
The outcome of his case has set a precedent in the UK which allows prenuptial agreements to be taken into account by the UK courts. It has to be made clear that it is not a legally binding document, but courts do have the right to interpret the law surrounding these agreements and are increasingly doing so. As long as the agreement has been entered into in good faith and represents a fair spilt of assets, the courts are likely to use it as part of their decision-making process.
For couples who are simply living together, a co-habitation agreement may also be a good idea. This may give rights to each partner that do not currently exist in law. Currently, people who are not married do not have an automatic right to their partner's assets; however, a co-habitation agreement could be a good way of making clear what the expectations of each partner are. When the time comes for marriage, it is important to look into the value of having a prenuptial agreement.
Having a prenuptial agreement is especially important for people who have assets, such as property, before they marry. It may allow each partner to keep the assets which they accumulated prior to the marriage, but to split the assets which were purchased since the marriage took place.
In cases of couples who already have children before they get married, having a prenuptial agreement is even more important. Each partner may wish to protect their assets for their own children if the marriage should come to an end. Clearly, if the marriage ends in divorce, this would have an effect on the value of the assets which that partner has to pass on to their children when they die.
Courts are not duty bound to accept a prenuptial agreement, but are more likely to do so if it has been presented in a professional way. It needs to be absolutely clear that both parties have agreed to the prenuptial agreement and that they wish for the agreement to be carried out in addition to their statutory rights. To achieve the best possible outcome for both parties, the following points should be kept in mind:
- Both parties should obtain independent legal advice. It will need to be shown that both parties were given all of the information they needed before they signed the agreement and that this was done by separate lawyers.
- All assets need to be disclosed at the time the agreement was entered into. This means that both assets and debts need to be fully detailed on the agreement. This includes any assets held overseas.
- The prenuptial agreement should be entered into well before the marriage takes place. This will show that due consideration has been given to the document and that it has not been rushed into. If any duress is shown, the document will not be considered by the courts.
- The prenuptial agreement needs to take the future of children into account. This includes those which existed prior to the marriage.
- The prenuptial agreement should also allow for some flexibility. This means that it needs to be able to be adjusted as things change within the marriage. For example if the couple have children or become ill, they should be able to make changes to allow for this.
A prenuptial agreement may not be viewed as being a very romantic notion for those entering into marriage, but it can be seen as a way of ensuring that someone is marrying for the right reasons. It removes the chances of marrying someone for their money or assets and ensures that each partner is working for the benefit of the marriage and children and not simply for their own needs.
