It is important to consider protecting your wealth when you are getting married, especially in circumstances where there are significant assets, property, businesses or inheritance involved.
Marriage is not just a romantic relationship, it also creates a legal and financial bond between two parties in which upon separation the starting point for division of finances is 50/50. If you have brought in substantial assets/wealth to the relationship, it is important to protect these post separation/dissolution of your marriage. There are different ways of protecting your wealth pre and post marriage, the most common method being to enter into a prenuptial agreement or postnuptial agreement. The main difference between these two agreements is the timing of when the agreement is entered into, such as before the parties get married, or after.
What is a Prenuptial Agreement?
A prenuptial agreement is an agreement between two parties who intend to marry. This agreement typically outlines the division of the assets in the event of separation or divorce.
As prenuptial agreements set out the assets involved and the proposed division of these, both parties are provided with clarity of how the assets will be managed post separation before they are legally married. While this may not be a topic you wish to think about when discussing your impending nuptials, discussing finances encourages open and honest conversations between the parties.
In addition to protecting the wealth you are bringing into the marriage, it is also vital to consider any pre-existing debts bring brought in, and how these will be handled upon separation. Adding a clause into the agreement relating to pre-existing debts helps protect the spouse who is not liable for the debts in the event that the parties divorce. Alternatively, this may also set out any agreement made between the parties such as splitting the debt equally, or one party being liable for a higher percentage etc.
What is a Postnuptial Agreement?
A postnuptial agreement is an agreement between two parties which is entered into after marriage. It serves a similar purpose to a prenuptial agreement but is created during the marriage rather than before.
While the principles are the same as a prenuptial agreement, postnuptial agreements are created during the marriage and allows couples to revisit and clarify their financial situation whilst addressing any changes in circumstances or priorities which may have arisen since the wedding.
Joint Benefits
While the benefits listed under prenuptial and postnuptial agreements are largely similar, there are also a lot of additional benefits to both types of agreement. Having an agreement in place – whether this is drafted pre/post marriage – helps streamline divorce proceedings as a settlement is already partly agreed. This may reduce conflict between the parties and reduce legal costs through negotiations.
Are Prenuptial and Postnuptial Agreements Legally Binding?
Prenuptial agreements are not technically binding in the Jurisdiction of England and Wales however they are given serious consideration by the Courts, pending specific criteria is met. The landmark case of Radmacher v Granatino in 2010 was a turning point, after which the Supreme Court ruled that prenuptial agreements should be upheld unless deemed unfair or not meeting certain criteria.
In order for a prenuptial agreement to be given considerable weight in a UK Court, the following criteria should generally be met.
- Both parties are required to receive independent legal advice to ensure they fully understand the agreement and the implications which follow;
- Full and frank disclosure must be disclosed to the other party before the agreement is signed;
- The agreement must be entered into voluntarily without any undue pressure or duress from the other party;
- The terms of the agreement must be fair at the time of signing and at the time of the divorce. It should not, for example, leave one party in a predicament of significant financial hardship while the other benefits disproportionately;
- Prenuptial agreements must be signed at least of 28 days before the wedding takes place.
The above criteria also applies for postnuptial agreements with the exception of the 28 days before marriage as this document is signed post marriage.
Even if these conditions are met, the Court have the right to waive the agreement if they consider it would be unfair to one party if it were to be enforced, particularly in situations where circumstances have changed substantially since the agreement was signed (i.e. the birth of any children etc).
It is imperative to seek legal advice when entering into a prenuptial agreement to ensure this is drafted correctly and the Court’s criteria has been met.
In Conclusion
It’s never too late to protect your wealth. Whether you are soon to be married or already wed, if you wish to protect your wealth then contact us to discuss your requirements further. We can guide you through the process ensuring that everything is done properly.
Contact us
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