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What is a prenuptial agreement – and why are they important?

In simple terms, a prenuptial agreement- or prenup – is an agreement that sets out how assets will be divided should a married couple divorce.

They have often been criticised as being ‘unromantic’, but that is a perception that is fast fading as they become more widely accepted and their value understood.

Where one or both parties are bringing assets into a marriage, where an individual is a beneficiary of a trust, or where a sizeable inheritance is expected in the future, both parties may well want to recognise that it is only fair that their assets or future gifted/inherited wealth should be protected in the event of a divorce. Prenups also provide clarity on how assets and wealth accumulated during the marriage would be divided on divorce.

If parties divorce with a prenup in place, there should be certainty with the cost and stress of litigation avoided.

Are they legally binding?

It is a question we are regularly asked and while a prenup is not legally binding under English law, they will almost certainly be upheld by the courts so long as certain criteria are met.

  • Both parties must enter into the agreement freely, with no suggestion of duress.
  • There must be financial disclosure, so each party understands what assets are involved.
  • Most importantly, the agreement must not produce an outcome that could be considered to be manifestly unfair. This usually means ensuring that it meets both sides reasonable needs on divorce.

A prenup should not viewed as a static document and may need to be reviewed during a marriage. The courts may be unsympathetic to a prenup signed 20 years ago that hasn’t anticipated changing family circumstances and finances. We would recommend they are reconsidered if family circumstances change in a way that may not have been catered for by the agreement.

It is possible to sign a post-nuptial agreement whether or not there has been a prenup. They can be agreed at any point during a marriage. They are particularly common when parents want to make a sizeable gift to their married son or daughter as part of their inheritance tax planning and want to ensure that the gift doesn’t end up in the hands of their son or daughter-in-law should their child get divorced.

Contact our Family Team

The Family team at Bishop & Sewell have a wealth of experience in dealing with family law, including financial agreements, and pre and post-nuptial agreements. Please email family@bishopandsewell.co.uk or contact 020 7631 4141 and ask to speak to our Family Law team.

The above is accurate as at 11 October 2024. The information above may be subject to change.
The content of this note should not be considered legal advice. Each matter should be considered on a case-by-case basis.


Category: News, Blog | Date: 11th Oct 2024


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