Family units are somewhat different to what they were many years ago and modern relationships see people marrying for a second or third time. This can introduce stepfamilies and families living across different households. The financial implications for a possible breakdown in a second or third marriage may be complex, for this reason, couples re-marrying are starting to look at pre-nuptial agreements as a way of protecting their home, and their children’s inheritance.
What is a Prenuptial Agreement?
A Prenuptial Agreement or a Prenup is a contract entered into by yourself and your partner prior to getting married. It is intended to outline the ownership of your assets and income in the event of separation or divorce.
Why an Agreement?
It’s not about being fabulously wealthy but it is about protecting what you have. A pre-nuptial agreement can be very useful to regulate how assets are divided upon separation in any of the following circumstances:-
- If it is a second or third marriage;
- There is a significant difference in the wealth of the spouses;
- One spouse is expecting money from a source outside of the marriage e.g. inheritance;
- The spouses want to ring-fence their wealth for their children as inheritance, say if they are marrying later in life.
Are Prenuptial Agreements legally binding?
Currently in England and Wales, a Prenup is not legally binding in that the Court does not have to automatically enforce the agreement reached but it will have a significant impact on a Court’s decision. In order to make it binding, it is necessary to meet the needs of the spouses and be fair and reasonable when allowing for the age of the spouses, the duration of the marriage and any financial or non-financial contribution that each spouse has made.
It is also imperative that the following conditions are met:-
- The Agreement must be made by each person of their own free will. There cannot be any improper pressure or influence.
- Each spouse must offer full disclosure of assets, liabilities, debts and income in the Agreement.
- Each spouse must obtain legal advice on the terms of the Agreement.
- The Agreement must be fair and reasonable. If the effect of the Prenup might be that they do not meet the children’s needs, or one spouse’s needs (where as the other spouse’s needs are more than comfortably met), then this will be treated as unfair.
- If a Pre-nuptial agreement, it must be signed and witnessed as a deed no later than 28 days before the marriage.
What is needed in a Prenuptial Agreement?
The Prenup can deal with the family home, savings and investments, pensions, how debts are to be discharged, the financial arrangements for the children, maintenance for either spouse and how any inheritance or trusts are to be dealt with.
The Importance of a Review of the Prenuptial Agreement
The longer the duration of the marriage following the Prenup, the greater the possibility that it may ultimately not be fair to bind the spouses to their contact. There may also be financial changes for the worse or better, in a spouse’s assets or income. For this reason, regular reviews of the agreement are strongly advisable, for the purposes of the terms being enforced, or in the event that there may be a change in circumstances, such as the birth of a child.
Timing of the Prenuptial Agreement
Whilst a Prenup must be signed before the marriage takes place, if a couple gets married and decides that they want protection after the marriage, they can sign a “Post-Nuptial Agreement” instead.
If you require advice on a Prenuptial or Postnuptial agreement, or you require mediation to discuss the contents of either, we are here to help.
This article was brought to you by Kathryn Coyle from our family team in Maidenhead. Kidd Rapinet offers a variety of family services across 6 branches you can search our family teams here