Prenuptial agreements are increasing popular as engaged couples and their extended families are now willing to look at the ‘what ifs and maybe’ as they have become more aware of the financial impact of divorce on family wealth.
Prenuptial agreement solicitors are often asked whether a prenuptial agreement is a worthwhile exercise if the one of the engaged couple isn’t ultra-wealthy. The answer is that in many scenarios a prenuptial agreement is just sensible planning, in much the same way as preparing a will, taking out life insurance or signing a lasting power of attorney. If you are already married and are looking for a postnuptial agreement, we also specialise in this so get in contact today.
What is the point of a prenuptial agreement?
Prenuptial agreements are designed to stop or limit financial claims if a couple split up after marriage. Most people don’t realise that after marriage a spouse can make claims for spousal maintenance, cash, property and pensions. A prenuptial agreement sets out how you plan to sort things out if there is a future separation and is intended to give you both peace of mind so that you both know where you stand financially.
What happens if we don’t sign a prenuptial agreement?
If you don’t have a prenuptial agreement in place then if you split up then either one of you could bring financial claims. The claims could be over assets owned by one of you prior to the marriage or inherited money or gifts. Without a prenuptial agreement in place these assets are more vulnerable. The costs of sorting out the split of money and assets is likely to be a lot higher because one or both of you may feel angry or hurt rather than able to agree on what is a fair split of assets.
Who should do a prenuptial agreement?
Anyone who is planning on getting married should consider a prenuptial agreement and get a bit of legal advice on whether an agreement would be a worthwhile exercise for you. Evolve prenuptial agreement solicitors can look at your current personal and future financial circumstances, for example in the future parents may leave a sizeable legacy or want to start to gift money to you during their lifetimes to reduce the eventual inheritance tax bill.
As a rule of thumb, a prenuptial agreement may be a sensible option if one or both of you:-
- already owns a house;
- already owns a business or holds shares in a family company;
- already has substantial savings or a pension ;
- is a beneficiary of a discretionary trust fund , whether or not the fund has in the past or is currently making income or capital distributions;
- is likely to inherit money;
- is likely to receive substantial gifts from parents or extended family as part of their inheritance tax planning;
- parents have put their property in the name of you and / or your siblings;
- have been married before or have children from previous relationships. This is especially important if you didn’t get a financial clean break order from a former spouse;
- would like a measure of certainty about how things will be sorted out in the event of a separation and would want any split to be amicable and civilised.
The best advice is to ask whether a prenuptial agreement is likely to be of benefit to you. As specialist prenuptial agreement solicitors we can tell you whether an agreement would be a good idea and advise you on your options.
What is essential for a prenuptial agreement?
- signed before the wedding – preferably 28 days;
- financial disclosure;
- independent advice;
- the agreement is fair to both of you and meets your needs.
When should a prenuptial agreement be signed?
The agreement should be signed within 12 months of the planned wedding and ideally not later than 4 weeks before the wedding date. Sometimes agreements are signed within the last few weeks before the wedding but it is not recommended as a prenuptial agreement is something that you should aim to sort out well in advance of the last minute preparations and stress of the big day and the agreement may carry less weight if it is signed late.
My fiancée doesn’t know how wealthy I am. If I do a prenuptial agreement will I have to say what I own?
This is often a quandary for couples who keep their finances separate and so they don’t know the detail of what their partner owns or earns or their partner doesn’t know about the existence of family wealth or trusts. For a prenuptial agreement to carry weight the two of you need to know what the other has or may get in the future , for example as a result of a trust distribution. This is because in order to come to an informed agreement and take advice you both need to know about the other’s circumstances.
Most people recognise the need to give information about finances in the agreement as in that way it will carry greater weight.
We are agreed on a prenuptial agreement but my fiancée doesn’t want to use a prenuptial agreement solicitor to give advice. Do we both need separate solicitors?
Yes, you do .If a fiancée doesn’t get their own separate legal advice on the agreement then it will carry less weight. The agreement is an important legal document, and just in the same way that you need a solicitor to sort out the title to a property when buying a house, you both need prenuptial agreement solicitors to advise you on the prenuptial agreement. There are normally a lot of options on what can go into the agreement and so you both need advice about what will work for you.
Many engaged couples are fearful about asking a prenuptial agreement solicitor to get involved with a prenuptial agreement as they don’t want any disagreements with their fiancée or their extended family. That is totally understandable and the job of specialist prenuptial agreement solicitors is to make you aware of what can go in the agreement , what may be good options for you and to sensitively finalise an agreement that works for both of you .
My fiancée doesn’t want any money if we split up. Can the prenuptial agreement say that?
The agreement can say that but, depending on yours and your fiancée’s financial circumstances it may not be in your interests for the agreement to say that they won’t get anything. This is because even if your fiancée knows how much you are worth , has their own prenuptial agreement solicitor and the agreement is signed at least 4 weeks before the wedding the agreement has to be fair and meet needs. The agreement that says a fiancée won’t get anything may be ok if you both have the same amount of wealth and income or if you are only married a very short period. However if you have children together or enjoy a long marriage the agreement may not be fair and therefore carry less weight. That is why it is important to get advice from prenuptial agreement solicitors on what should go in the agreement so that the document is as effective as possible in protecting family wealth.
The house is owned by me. Why do we need a prenuptial agreement if it is my property?
When a couple get married a spouse automatically is entitled to make financial claims on separation , including claims over property , shares , investments , cash , pensions and businesses owned by one spouse. They can also ask for maintenance. That means sole ownership of a property or assets doesn’t protect them from claims on divorce. The prenuptial agreement is designed to stop or limit those claims.
We don’t know where we will live in the future as we don’t own a property. Can we still sign a prenuptial agreement?
Yes, you can. A prenuptial agreement often has to look forward to future events, such as the arrival of a child or the birth of additional children, the receipt of a gift or legacy or the purchase of a property.
Do I need a prenuptial agreement as I am a beneficiary of a trust? Does the trust protect the family money?
A trust is a very useful means of protecting family wealth but it is only one protective measure. Most trustees would always recommend that a beneficiary of a discretionary trust fund should also have a prenuptial agreement prepared by specialist prenuptial agreement solicitors. That agreement can record that any trust money is ring fenced and protected from any claims on divorce.
Do I need a prenuptial agreement as I am a shareholder in a family company and already have a shareholder agreement?
Yes, you do. A shareholder agreement is drawn up to regulate how the company and shareholders will operate. Whether your future spouse is or isn’t a shareholder in the company the shareholder agreement won’t stop them from being able to bring financial claims against your shareholding on divorce. That financial claim could cripple the company. A carefully prepared prenuptial agreement by specialist prenuptial agreement solicitors will complement the shareholder agreement.
We own property abroad. Do we need a prenuptial agreement in the UK as well as where we own the property?
Possibly. A lot will depend on where the property is owned and by who. Robin Charrot is a Fellow of the International Academy of Family Lawyers, the world’s leading organization of expert international family lawyers and, where there is potentially a need for more than one prenuptial agreement, he works with other specialist prenuptial agreement solicitors in different countries to make sure that you are protected.
My fiancée isn’t a British citizen. Where should we sign a prenuptial agreement?
If you are going to be living in the UK and have property in the UK, then probably the prenuptial agreement needs to be prepared and signed in the UK but much will depend on your individual personal and financial circumstances. In some family situations couples elect to sign mirror agreements in the other relevant country/ies to cover the possible multiple jurisdictions as a result of international connections or wealth. In any situation where there is any possibility of a choice of or different jurisdictions it is vital to get expert advice from prenuptial agreement solicitors as not doing so could have a tremendous impact on whether or not the prenuptial agreement is effective and the cost of a divorce .
We signed a prenuptial agreement a few years ago and we are happily married but our financial circumstances have changed. Do we need to do anything?
That depends on what the prenuptial agreement says, how your personal and financial circumstances have changed and what the original agreement said about when the agreement would be reviewed. The best option is to get the document reviewed by a prenuptial agreement solicitor as if your circumstances have changed a lot then the original agreement may no longer meet your respective needs and, if it doesn’t do that, then it won’t carry much weight.