Family Law

Are pre-nuptial agreements worth it?

An article by Kathryn Cassells, Senior Associate

Are pre-nuptial agreements worth it?

What is a prenup?

A couple planning to enter a marriage or civil partnership may decide to enter into an agreement that shows what they intend to happen to their money and property if the marriage or civil partnership were to end.

Are they binding?

The status of the pre-nup radically changed thanks to the Supreme Court case of Radmacher v Granatino in 2010.  Int his case the Supreme Court found that the court, “should give effect to a 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”. 

Since this case, if the Supreme Court test is met then you should expect to be bound by your pre-nup.

There are various steps that should be taken to enhance the efficacy of your agreement such as: (i) providing full financial disclosure; (ii) each obtaining independent legal advice; (iii) negotiating and reaching an agreement in good time before the marriage; (iv) ensuring both parties understand the terms of the agreement; and (v) providing for each party’s needs. This list is not exhaustive and it is not even the case that if the complete list is complied with then the pre-nup can be enforced like a commercial contract because parties cannot exclude a Judge’s discretion to decide a fair division of assets. However, a procedurally and substantively fair pre-nup becomes a relevant and often decisive factor in disputed cases.

In many cases where a fair pre-nup has been entered, there will be no need for the parties to go to court at all.  Family lawyers can draft a further document (known as a consent order) which embodies the terms of the pre-nup and gives legal effect to it.  

The case law on pre-nups is complex and constantly evolving. Where a party’s needs are not met by the agreement the court has always felt able to deviate from the agreement to the extent necessary to meet such needs.  It is therefore very important that you discuss the terms of a pre-nup with your family solicitor both at the drafting stage at the beginning of the marriage, and when implementing the pre-nup post separation.  

What can a pre-nup include?

A pre-nup is a bespoke document draw up for the two of you, so it can cover lots of things, although your solicitor will be able to advise you as to what types of provision are enforceable, and the focus of the agreement will be on financial arrangements. For instance, the pre-nup can cover: what will happen to property that either of you brought to the marriage; what will happen to the family home; what will happen to any gifts or inheritance received by each party during the marriage; and whether there will be any ongoing maintenance provision.  

Final thoughts

A pre-nup can give more certainty as to financial arrangements in the event that you divorce, provided the agreement is entered into in accordance with the suggested steps as to legal advice and disclosure, and represents a fair arrangement for both parties. It can be an effective way to protect assets that you may have had prior to the marriage, particularly if you, for example, wish to protect assets for the purpose of an inheritance for any children of a prior marriage or relationship.