2022 has been a landmark year for family law, with the introduction of the ‘no-fault’ divorce law coming into effect on 6 April removing the need to prove a relationship has broken down.
Meanwhile, many couples across the country are still waiting to tie the knot following Covid-related postponements and delays to their wedding day.
Although a pre-nup may appear unromantic on the surface, I discuss why now is the time for these couples to consider putting one in place.
What are pre-nuptial agreements?
A pre-nuptial agreement, or pre-marital agreement, is an agreement made by a couple before they marry or enter into a civil partnership. It sets out how they wish their assets to be divided should they divorce or have their civil partnership dissolved.
Pre-nuptial agreements are not automatically enforceable in English and Welsh courts.
Commonly associated with the rich and famous, pre-nuptial agreements can often be sensationalised by news stories. This has led to widespread belief that the agreements are unfair, worthless and unromantic, when in fact they can be a sensible, fair and transparent way to discuss financial matters and agree the outcome in the event of separation.
What does the court say?
In 2010, the Supreme Court held that courts should give effect to a pre-nuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless, in the circumstances prevailing, it would not be fair to hold the parties to their agreement.
The ruling does not make pre-nuptial agreements binding in all cases, but the fairness of upholding any particular agreement will be considered by the court on a case-by-case basis.
However, some pre-nuptial agreements will now have effect in the absence of circumstances, which would make this unfair.
In February 2014, following consultation, the Law Commission published its final report, Matrimonial Property, Needs and Agreements.
Among other things, it recommended the introduction of “qualifying nuptial agreements” as enforceable contracts, which would enable couples to make binding arrangements for the financial consequences of divorce or dissolution.
These agreements, which would have to meet certain requirements, would not be subject to the court’s assessment of fairness. Couples would not be able to contract out of meeting the financial needs of each other and of any children.
Growing in popularity
While not everyone will want to contemplate the end of a marriage or civil partnership before it has even begun, pre-nuptial agreements are certainly gaining in popularity as a good way of helping couples decide what should happen in the event of a divorce.
The creation of a pre-nuptial agreement also requires that certain formalities are observed, which can help provide further peace of mind for both parties. For example:
- The agreement must be entered into by both parties without any pressure from one party on the other;
- An agreement signed within 21 days before the marriage or civil partnership is generally regarded as inappropriate;
- Both parties must fully appreciate the implications of entering into the agreement. Before any agreement is signed, each party must be fully aware of the financial position of the other;
- Individuals should both take independent legal advice before entering into the agreement from a specialist family lawyer;
- The agreement must be fair, making provision for any children and future children. It must meet the needs of the parties and any children;
- Reviewing the pre-nuptial agreement if there are any changes in circumstances, such as the birth of any children.
Three golden rules
As with any formal paperwork relating to relationships, the prospect can be somewhat daunting.
However, there are three simple and easy-to-follow pieces of advice that we recommend couples follow when deciding to get a pre-nuptial agreement:
- Don’t leave it until the last minute
Explore the topic early on and don’t wait until the week before the wedding to discuss a pre-nuptial agreement. You will have enough to worry about as your big day approaches, so plan ahead.
- Think with your head and not with your heart
It is difficult to talk about a loving relationship as if it were a business arrangement. You and your partner need to think logically, rather than emotionally about the preparation of a pre-nuptial agreement.
- It’s not just about protecting the “wealthier” partner
Traditionally, a pre-nuptial agreement determines the fate of assets that each party brings to the marriage. But the agreement can also address debt obligations, future inheritance and gifted financial resources from outside of the marriage. Both of you stand to benefit from having the agreement in place.
A pre-nuptial agreement does not have to be an unromantic, daunting or depressing task. An agreement can often help couples better understand exactly where they stand at the start of or during a marriage or civil partnership and in the event of divorce.
Hopefully, the agreement will never be needed, and a couple will spend many happy years together.
About Layla Babadi
Layla is a Legal Director at Nelsons. She qualified as a solicitor in 2005 and joined the Family Law team in 2015.