This is often considered a difficult subject to approach, and some have, and will continue, to criticise the process as a negative start to a relationship.
When a couple take the step of living together, whether this is with a view to marriage or long term cohabitation, it is important that steps are taken to protect assets which are being brought into the relationship and to define what will happen to those assets in the unfortunate event that the relationship subsequently breaks down.
Pre-Nuptial Agreements are appropriate where two people intend to marry in the near future. Where there is no intention to marry it is more appropriate for a Living Together Agreement to be entered into. There are differences, and both documents would need to be kept up to date, and periodically reviewed, to ensure the document reflects any change in circumstances.
Do I really need a Pre-Nuptial Agreement?
It is advisable where you already own assets in your own name, and are intending to co-habit or marry. This is particularly important if you have been married before, to protect any children who may lose out financially after the marriage
Is it legally binding in English Law?
While Pre-Nuptial Agreements are not currently legally binding in English Law, there is recent case law which has shown that the Courts do consider such Agreements, and Judges are becoming more amenable to giving more weight to Pre-Nuptial Agreements and these are considered, together with other statutory factors, when a Court is required to deal with division of assets in Divorce Proceedings or Civil Partnership Dissolution. The Courts have to consider financial matters as at the time of the Court proceedings to ensure a fair and reasonable settlement is achieved. A pre-Nuptial Agreement can identify and “ring fence” specific assets which can be excluded from the “matrimonial pot” and treated differently to other matrimonial assets.
Do I need the Pre-Nuptial Agreement to be drafted by a lawyer?
It is imperative that any Pre-Nuptial Agreement is drafted correctly to include all pre-marital assets and that certain criteria are met:
- Both parties to the Agreement must have had independent legal Advice with regard to the effect and implication of the Agreement;
- Both parties must be aware of the other’s financial position, and full and frank financial disclosure ought to take place to confirm each parties position. It is good practice that a Schedule of the assets is composed, referred to within the Agreement and annexed to it.
What do I need to include in a Pre-Nuptial Agreement?
The Agreement should specify the assets of each party; what is intended to happen to those assets upon separation, and what is to happen to any future assets acquired during the marriage. The more reasonable the terms of the Agreement, the more likely it is to be relied upon in the future. The Courts have to consider a number of factors contained in s25 Matrimonial Causes Act 1975 to ensure fairness to the parties, in particular where there are minor children. The Agreement will be considered by the Court together with the statutory factors and circumstances at the time when making any financial Order. It is important that the Agreement also takes account of any children and future children of the parties, and the intended arrangements for their support.
How long does it take to draft the document?
Provided all financial information is available to be disclosed, the procedure should take between one and three months. This very much depends upon the number of assets and complexity of the matter. An individual time and cost estimate would be provided in each case to reflect this.
Am I better off leaving it to chance in the event of separation?
No. Although the Courts currently do not consider Pre-Nuptial Agreements legally binding, the existence of such a document sets out the agreement reached between the parties before marriage. It clearly sets out the financial position of both parties entering the marriage, and states their wishes and intentions at the outset.
- If the relationship subsequently breaks down, matters become hazy and opinions become obscured in recalling the discussions about who has what. Provided the Pre-Nuptial agreement has been entered into in accordance with the above criteria, the Courts will consider the Agreement and use this as one of the factors to decide a fair division of matrimonial assets.
- The shorter the marriage the more weight the Courts are likely to put on the Agreement. In the absence of any Pre-Nuptial Agreement Courts can only take into account the information available at the time of any Divorce/Dissolution which may not be a true picture of the original intentions of both parties to the marriage. Do you want to take that chance?
- It is also worth bearing in mind that case law changes the views of the courts and whilst it is accepted that we cannot, at present, say the Courts view the Pre-Nuptial Agreement as a binding Contract; this may change in the future, in particular given the increasing number of people who are seeking to rely on Pre-Nuptial Agreements to protect their wealth, and the Courts views to consider these documents within contested hearings and Appeals.
- We take the view that if people wish to protect their assets and wish to enter into a Pre-Nuptial Agreement then they should be encouraged to do so. We will work with you to ensure this process is dealt with amicably, and in a non-confrontational manner whilst at the same time drafting the most appropriate documents for your personal circumstances to give as much protection as possible for you in the future if matters do not end as you intended.
Why Act Now?
The earlier the Agreement is entered into the better. It is advisable that the Agreement is prepared at least 3 months prior to the marriage. If the Agreement is entered into close to the date of marriage, this may cause difficulties in the future as one party may seek to allege that they signed the Agreement under duress which could result in the Courts giving very little consideration to the document. This is more likely if the Agreement has only been signed within few weeks or days prior to the marriage.