What is a prenuptial agreement and should I get one?

What is a prenuptial agreement?

A prenuptial agreement is a legal document some couples decide to sign before they marry.

Drawn up by a solicitor, it sets out how their assets will be divided if they decide to divorce in the future. 

Typically, these agreements have been more common in countries such as the United States and among celebrities, but they are becoming increasingly popular in the UK as couples choose to make their financial arrangements clear in case the relationship is dissolved at a later date. 

According to the Marriage Foundation, one in five marriages now begin with a prenup. 

However, prenuptial agreements are not considered legally binding in England and Wales but are increasingly being upheld by the courts.

When should you consider a prenuptial agreement?

You should consider signing a prenup if you have substantial financial assets, such as property or business interests, expect to receive a considerable inheritance or have a complex family situation, such as children from previous relationships.

It’s especially a sensible idea if one party is bringing more wealth to the marriage than the other. 

A prenup can also protect you from a partner’s debts and ensure you retain control of your business if you have one. 

It is also a way of ensuring that both parties entering the marriage get a say in how the assets may be divided in the case of a divorce.

When should you get a prenup?

If you are planning to have a prenup in place for your marriage, you should ensure that it is signed at least 28 days before the wedding. 

This is to demonstrate that both parties entered into the agreement freely and that there was no coercion of any kind.

Both parties should also receive independent legal advice. 

Ensuring that this is the case will make it more likely that the agreement will be upheld in the event of a divorce. 

If you are entering into a civil partnership, you can also sign a pre-registration agreement, which is similar to a prenuptial agreement.

How to draft a prenuptial agreement

While there are templates available on the internet, it’s best to appoint a solicitor familiar with drafting prenuptial agreements to ensure that it is properly put together and more likely to be legally binding. 

The prenup is also more likely to be upheld if both parties have appointed their own independent legal representatives to advise them on the details. 

The parties must also be shown to be freely entering into the agreement.

What should be included in a prenup?

A prenup is a bespoke document entirely tailored to you and your partner’s needs and assets. 

Typically, it will include a list of your combined assets, how they are managed and how they would be divided in the event your marriage ends. 

You will need a list of items such as:

• Income details

• Property held solely or jointly

• Bank account savings

• Investments

• Premium bonds

• Business interests

• Pension funds

• Possible inheritance expected in the future

Together with your solicitor, you will need to work out which partner will keep certain assets in the event of a divorce, or whether these will be split equally or proportionally. 

If a prenup is later found binding by the divorce courts, it may prevent you or your partner from automatically receiving a share of these assets in the case of a split. 

You will also together decide on the level of spousal support to be paid if your marriage breaks down.

What cannot be included in a prenup?

Issues such as the religious upbringing of a child, child custody matters, child support, lifestyle issues and schooling cannot be included in a prenuptial agreement.

How much is a prenuptial agreement?

Prenups typically cost between £1,500 and £3,000 plus VAT.

The more substantial the assets involved or the increased complexity, the higher the legal cost will be to draft the documentation. 

Solicitors typically say that if your total financial portfolio is worth more than £1 million, then more bespoke documentation will be required and the fee for the prenup will be more expensive.

What if we have international financial assets?

It may be advisable to seek the advice of a lawyer with knowledge of family law in different international jurisdictions. 

It may also be a good idea to have mirror prenups drafted in the country or countries where your other assets are held, as it is possible your UK prenup will not be upheld in other countries and vice versa.

Is a prenup legally binding?

Prenuptial agreements are not officially legally binding in the UK.

However, the British courts have begun to uphold them more often following the case of Radmacher v Granatino in 2010. 

In the legal case, a French investment banker signed a prenup with his wealthy German wife.

He later claimed during the divorce proceedings, nine years later, for payments from his ex-wife, arguing that the agreement should not stand because he had not received independent legal advice. 

He also cited a previous case - MacLeod vs MacLeod – arguing that prenuptial agreements went against public policy as the less wealthy party would be under pressure to sign it, and that it excluded the jurisdiction of the court, which was unfair.

However, his ex-wife argued that he had freely entered into the prenup and the agreement was upheld. 

In Scotland, however, it is more common for prenups to be legally binding. 

Both parties should have their own solicitors to advise them, and the prenup should be signed well in advance of the wedding for it to be more likely that it will be upheld by the courts.

Get expert financial advice

If one or other of the parties to a forthcoming marriage has substantial assets, a business or may be entitled to a large inheritance, signing a prenuptial agreement may be a wise option. 

It may not be the most romantic thing to do before a wedding, but you may be thankful for it in later years if the relationship goes wrong or you grow apart. 

A prenuptial agreement isn’t necessarily legally binding, but it may give you peace of mind and a legal document to fall back on in the event your marriage breaks down. 

Let Unbiased match you with a solicitor or financial adviser for expert advice on your finances.