If you are bringing personal or business assets into a marriage, you may benefit from a prenuptial agreement, or “prenup”. These kinds of agreements are no longer just associated with the rich – families from all income levels should consider how to protect their assets in the event of a divorce. Below, we outline what a prenuptial agreement is and why you should consider arranging one.
What is a prenuptial agreement?
A prenup is a document that couples sign before they get married. The document outlines how property and assets should be divided if the relationship ever ends in divorce. It is also possible for individuals to seek to protect themselves from any debts their partner accrued before the marriage. You can include anything from cash sums to intellectual property rights and shares.
Prenuptial agreements are often primarily concerned with assets you have accrued before you enter the marriage as opposed to joint assets acquired during the marriage. However, there are no set rules as to what you can and cannot include, so you can specify that additional assets, such as any future inheritances, are not to be shared with your spouse if the marriage ends.
What are the benefits of having a prenuptial agreement?
Prenuptial agreements may not seem the most romantic subject to bring up with your future spouse, but they have crucial benefits including:
- They make you and your partner confront financial issues at the outset. Financial conversations are serious, and they shouldn’t be avoided.
- They minimise conflict during divorce proceedings because the division of assets has already been agreed.
- Prenups give you and your partner a solid plan and a strong foundation of trust and honesty to build on.
- You can have control over your own assets and where they will go.
Signing a prenup doesn’t mean that you are anticipating a divorce. Instead, with divorce rates on the rise and people getting married later, you’re simply being prudent and looking after everyone’s best interests.
Downsides of signing a prenuptial agreement
Of course, everything has a downside and prenuptial agreements are no exception.
Prenups are not currently legally binding in England and Wales. However, the courts are more often taking the view that these agreements should be upheld. Prenups will be given decisive weight where they have been entered into freely by both parties to the marriage and where both partners have a full appreciation of the implications of the agreement. In those circumstances, the agreement should be upheld unless it is considered to be unfair. It is this crucial element of fairness which can lead to challenges against prenuptial agreements.
There’s also the chance that one partner may be sceptical about signing an agreement, which we’ve touched on above. They may still sign the agreement but resent ever being asked, and this can foster unhealthy feelings between spouses. Outsiders may also assume you don’t trust each other if you are already contemplating divorce.
Finally, there’s a chance that one party was not entirely honest at the time of signing the agreement, which leaves open the possibilities of fraud and concealed assets. One spouse may also treat the other unfairly or exert pressure on them to agree to something they don’t want to agree to. Either of these factors may invalidate the agreement.
Deciding if a prenuptial agreement is right for you
Consider discussing a prenuptial agreement with your partner if you’re bringing any assets at all into the marriage. Assets which are typically dealt with in prenuptial agreements include:
- Savings or inherited assets accrued before the marriage begins
- Real estate and properties
- Income (particularly if one or both of you earn substantial incomes)
- Future assets such as inheritance
- Businesses, stock options, investments and shares in companies
- Intellectual property rights
- Accrued pensions
- Premarital debts
You can then agree how these are to be dealt with on divorce as you see fit.
Of course, prenuptial agreements are not for everyone or every couple. You may simply not want to bring it up, or you may not have premarital assets to protect. In this case, you should consider preparing a will which will set out how property is divided in the event of your death. This is helpful for ensuring that, for example, children from previous marriages are properly provided for. Expert advice is essential when considering your options.
Whether you decide to enter into a prenuptial agreement or not, it’s a good idea to sit down with your partner and ensure you fully understand each other’s financial positions.
At AMD Solicitors, our experienced team of family solicitors can advise you regarding a prenuptial agreement and decide if it’s the right choice for you. We also provide will writing services. Don’t hesitate to contact us for advice and assistance. Call today on 0117 9733 989 or fill out a contact form and we will get back to you.