Why should I sign a pre-nuptial agreement?
Historically, pre-nuptial agreements were considered against public policy in England and Wales and were, to use the common phrase, “not worth the paper they’re written on”. However, there has been a major shift in the last decade in respect of the enforceability of pre-nuptial agreements by the courts following the landmark decision in the case of Radmacher (formerly Granatino) v Granatino  UKSC 42. In this case, the Supreme Court held that decisive weight could be given to a nuptial agreement that has been entered into freely by the parties on the basis that they fully understand the implications of the agreement, taking into account the circumstances of the case so long as it would not be unfair. Therefore, whilst the court still has the overriding authority when considering such agreements, if you sign one you should only do so expecting to be held to its terms.
Pre-nuptial agreements were once considered to be only for the rich and famous. However, in my view every single person contemplating marriage should at the very least consider the possible benefits to having a pre-nuptial agreement in place. Below I have summarised some of those benefits.
By entering into a pre-nuptial agreement, you and your partner can make it clear to one another that certain property belongs to you only and will not be shared in the event of a divorce and certain property will be considered joint and shared between you.
By agreeing how your finances will be divided if you later separate or divorce, this saves you both the uncertainty, time and stress of going to court about your property and finances.
Transparency & better communication
As part of the process of entering into a pre-nuptial agreement, you and your partner should each provide disclosure of your finances. This means that you will both be aware of the value of each other’s finances at the outset of the marriage which will help you agree what would be fair. Discussing financial issues can be one of the most difficult aspects of marriage. Dealing with this prior to marriage may strengthen your relationship.
While you and your partner will incur legal fees for preparing and advising on the terms of the pre-nuptial agreement, it is usually much less expensive to do this than to go to court about the division of your finances should you later separate or divorce.
Protection of assets
You or your partner may have or expect to have in the future inherited assets, an interest in the family business or a gifted property, for example. The pre-nuptial agreement can “ringfence” these assets from one another. If you have entered into a pre-nuptial agreement which ringfences such assets, the court is less likely to award a share of that asset to the other party on any future divorce.
If your partner has significant debts, either now or in the future, the pre-nuptial agreement can be used to protect you from having to satisfy those debts from your assets if you were to later divorce.
Compensation for loss of career
If you or your partner were to give up work to care for the children of the family, you may decide that it is fair for the person leaving work to receive a greater share of the assets on divorce to compensate them for their loss of career. Compensation is a difficult one to convince the court to award but if it is included within the pre-nuptial agreement the court is more likely to award it.
Protection of family members
You or your partner may have children from a previous relationship and may want to protect some of your assets so that you can pass them to your children in the future rather than such assets being divided upon divorce.
Minimises acrimony on divorce
By agreeing how you would divide your finances if you were to separate, you are less likely to be involved in an acrimonious dispute about the finances on divorce and this will help you maintain a positive relationship even if you do separate, which is really important, especially if you have children together.
Protection of business partners
If you or your partner have an interest in a business, the pre-nuptial agreement can protect that interest and prevent disruption to the business if the marriage breaks down in the future. This could prevent your partner from being awarded an interest in the business or being involved in the running of the business in the future if you were to divorce.
Provision on death
The terms of a pre-nuptial agreement can support the provisions of your Will in terms of how you would like assets to pass upon your death.
Freedom to agree your own terms
By agreeing how finances would be split on divorce or separation, you can come up with much more creative solutions than the court is likely to order. The pre-nuptial agreement gives you the freedom to decide your own terms rather than the court imposing its own solution on you.
Hopefully the above information helps to clarify the reasons why you may wish to consider entering into a pre-nuptial agreement in advance of marriage.
If you would like more information or would like to go ahead and prepare a pre-nuptial agreement please do not hesitate to contact our experienced matrimonial team on 0113 322 9222 or by email at email@example.com.