Nuptial agreements – Is it right for me and what should I look out for?
Pre-nuptial agreements are becoming more and more common now for couples within the UK. In the 1980’s, on average only 1.5% of newly married couples would look to have a pre-nuptial agreement in place before tying the knot. Research from the last couple of years now suggests this has now risen to a staggering 20% of all couples getting married.
There are likely multiple reasons as to why there has been such a dramatic increase in pre-nuptial agreements being sought by couples. In recent decades whilst nuptial have been more widely publicised as being obtained by the rich and famous ahead of their own marriages, there is an argument that individuals today are just more aware of the fact that for one reason or another, their marriage/partnership may not pan out as they expect. Currently between 30-40% of marriages end in divorce as per the Office for National Statistics.
Having either a pre or post nuptial agreement can help prevent the stress and financial cost that separation can entail, by clearly setting out the parties’ intentions should a split ever occur. It can prevent time and money being wasted battling in court, protect assets already held by one party that they want to ensure will remain available for themselves or a loved one, or protect a future asset such as inheritance.
With contested financial proceedings potentially costing upwards of £15,000 depending on the nature of the disagreement between parties, some consider a nuptial agreement to be like that of an insurance policy. Instead of entering into an agreement with an ulterior motive or with the expectation that the marriage/partnership will fail, it is gone into with the hope that it never needs to be used but is there in the event it is ever needed.
Not all nuptial agreements are created equal though. Since the case of Radmacher in 2010, whilst nuptial agreements are given increasing weight in English courts, the final say remains with the court as to what an appropriate financial split should be. To make your agreement worthwhile and as strong as possible, it is vital that it follows several key principles that have been established in recent years:
Financial disclosure: Both parties should at the time of writing the agreement set out their financial circumstances in full. By taking what I refer to as an ‘open palm’ approach to proceedings, this ensures that nothing is hidden from either parties’ knowledge when creating an agreement. This prevents any potential argument by one side down the line that they would not have entered into the agreement if they knew of a particular assets’ existence.
Independent legal advice: Both parties should receive their own legal advice about the agreement’s contents and effects from a qualified individual. This is a vital step as it proves to the court that both parties were aware of the circumstances and knew what they were doing when they signed the agreement. Agreements drawn up informally between parties or using an online template will not meet this threshold and will be less likely to hold up to scrutiny in court.
Timing: Whilst there is no set date prior to getting married/entering a civil partnership at which point entering a pre-nuptial agreement can no longer be done, it is strongly recommended that there is at least 21 clear days between signing the agreement and the day itself. This helps prevent an argument that one side was forced into signing the agreement at the last minute or did so under duress. If you find yourself with less then 21 days until the wedding and want an agreement in place, it may be worth considering a post-nuptial agreement instead.
Review: The court will naturally give less weight to an agreement that was drawn up 20 years prior to one which has been in place for only a short amount of time, as they will expect people’s circumstances to change over time. It is therefore important that the agreement contains provisions for when it should be reviewed to remain valid. These should cover things such as after a specific length of time, or significant life events like a child being born to the parties’ or if one of the parties was to develop a serious health issue.
Fairness: Whilst this is one of the harder principles to quantify as to whether an agreement follows it, its premise is rather simple. The court won’t hold an agreement as binding if it is clearly unfair in its terms. If an agreement leaves one party with significant assets and the other with nothing at all, it likely won’t be considered fair by a court. The court will at a minimum want to ensure both parties’ basic needs are being met following on from separation.
Having all the above in place will maximise the possibility that a court reviewing the agreement will give it as strong a weighting as possible and uphold its contents.
At John Hodge solicitors, we will look to ensure that any agreement drawn up follows these principles and can advise accordingly on each of them. This way you can rest assured that the agreement you have in place is worth the paper it’s written on.
With drafting any agreement, we would look to create a positive atmosphere so that rather than feeling confrontational when having the agreement written, it will feel instead feel collaborative in its nature between parties.
If you think a nuptial agreement may be right for yourself, we offer a free 30-minute consultation with a family solicitor who can discuss further with you what you are looking to achieve with your agreement and whether it is the right option for you.