Nuptial agreements are entered into by happy couples before or after marriage. They can be used as an effective wealth planning tool to protect the financially stronger party to a marriage whilst also providing an element of financial certainty for the financially weaker party in the event that the relationship breaks down.
I have answered some of the most frequent questions I get asked about these types of agreement.
Are they only for the rich?
No. Nuptial agreements are used by a wide range of people seeking to protect their assets and limit the claims that might otherwise be made upon divorce. People who enter into such agreements often:
- Have built up assets prior to the relationship e.g. a company, property, investments etc but these do not have to be substantial;
- Have inherited money or received lifetime gifts prior to a relationship;
- Anticipate receiving an inheritance at some point in the future; or
- Have already been through one divorce and want to avoid the stress of undergoing that process again and to protect the assets they received from the original divorce settlement.
If I enter into an agreement can I avoid paying any money to my spouse on divorce?
It will depend on the circumstances and terms of the agreement. The aim is not to avoid paying the other party anything but to limit the claims they might otherwise be able to make on divorce. You will always have to ensure that their needs are met upon divorce but if they are able to meet those needs from their own resources (and possibly their share of any joint assets) then it is possible that no payment will have to be made.
If they are not legally binding, what is the point of having one?
Whilst they are not yet legally binding, the court does give significant weight to them. The leading case law states that an agreement should be upheld if it has been entered into properly, both parties understand the terms and, most importantly, the financial provision being made by the agreement is fair. If, however, the Agreement leaves one person with nowhere to live and no income on divorce, it is very likely that it will not be upheld by the court.
How can I ensure that the court will uphold a nuptial agreement?
It can never be guaranteed that the court will uphold an agreement but to ensure an agreement has the best chance of being upheld, it should be entered into (1) freely and without pressure from either party; (2) following full financial disclosure being provided; (3) with each party having received independent family law advice; (4) ideally 28 days prior to the wedding; and (5) the terms of the agreement need to be fair.
Can I draft my own?
I strongly advise that any nuptial agreement is drafted by a specialist family law solicitor to ensure that it includes all safeguards and provisions that will give it the best chance of being upheld.
Should I discuss the prenuptial agreement with my fiancé/e or spouse?
Yes. It will greatly assist the process if you have discussed it first. It is sensible to first take legal advice as to the process of entering into an agreement and the types of agreement that can be made. Following this, if you are comfortable doing so, you should discuss it with your fiancé/e or spouse so that (1) it does not come as a shock to them in the run up to a wedding and cause unnecessary confrontation, (2) they can understand the basis on which the agreement is being proposed and (3) you can reassure them that the terms of any agreement will be fair to them.
When should I seek advice about a nuptial agreement?
In short, as soon as possible. Ideally, you do not want to be negotiating the agreement at the last minute in the run up to a wedding, as this will cause unnecessary stress and tension before your big day. Best practice is for a pre-nuptial agreement to be signed at least 28 days before the wedding. Therefore the earlier you can take advice and start engaging in the process the more likely this deadline will be met.
If you are considering entering into pre or post nuptial agreement or would like more information, please contact me or one of our specialist advisors.
