Prenuptial Agreements (“prenups”) are a hot topic in family law, yet they remain widely misunderstood. In England & Wales, where cultural familiarity with prenups lags behind countries like the US or France, many couples are unaware of their benefits or believe they hold no legal weight. However, the landmark case of Radmacher v Granatino (2010) shifted the legal landscape, placing prenups firmly within the realm of enforceable agreements under certain conditions. Here, we delve into what prenups are, why they matter, and how they can benefit couples planning their futures together.
What Is a Prenuptial Agreement?
A prenuptial agreement is a legal contract entered into before marriage or civil partnership that outlines how a couple’s assets, debts, and financial responsibilities will be divided if the relationship ends. While commonly associated with protecting wealthier partners, prenups are beneficial for individuals of all financial standings. They serve as a form of financial planning, providing clarity, transparency, and peace of mind.
Why Are Prenups Gaining Traction in England and Wales ?
Although prenups have a long history overseas, their adoption in the UK is relatively new. According to research by Handelsbanken Wealth & Asset Management, 89% of married or civil partnership couples in the UK do not have a prenup. This is particularly pronounced among older couples, with 99% of over-55s lacking such agreements. Despite these figures, prenuptial agreements are becoming increasingly popular among younger couples and entrepreneurs who wish to safeguard their assets and businesses.
Are Prenuptial Agreements Enforceable in the UK?
The short answer is yes, but with caveats. The Supreme Court in Radmacher v Granatino (2010) established 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 the agreement.”
This ruling introduced a three-step test to determine whether a prenup is likely to be upheld:
- Freely Entered Into: The agreement must be signed voluntarily without coercion, fraud, or duress.
- Full Appreciation of Implications: Both parties must understand the terms of the agreement, which often requires independent legal advice and full financial disclosure.
- Fairness: The agreement must not unfairly prejudice either party or any children of the marriage.
The Three-Step Test in Practice
1. Freely Entered Into
A prenup signed under pressure or last-minute circumstances is less likely to hold up in court. Best practices recommend starting discussions well in advance of the wedding, ideally four to five months beforehand, with the final agreement signed at least 28 days prior to the legal ceremony.
2. Full Appreciation of Implications
To ensure the agreement’s validity, both parties must:
- Obtain independent legal advice from separate solicitors.
- Exchange financial disclosure with each other.
Failure to meet these requirements may not render the prenup invalid, but it can significantly weaken its enforceability. Courts are likely to scrutinise agreements more closely if financial disclosure is incomplete or absent, as seen in cases like Kremen v Agrest (2012) and Briers v Briers (2017).
3. Fairness
Fairness is subjective and depends on the specific circumstances of the couple. Prenups must address reasonable needs, such as housing, income, and the welfare of any children. For example, a financially weaker spouse who sacrifices their career to care for children should not be left without adequate support. Courts also consider the length of the marriage, unforeseen changes in circumstances, and whether the agreement protects “non-matrimonial assets” (e.g., pre-marital or inherited property).
Benefits of a Prenup
Prenuptial agreements offer numerous advantages, including:
- Clarity and Transparency: Couples gain a clear understanding of each other’s financial positions, fostering open communication.
- Asset Protection: Prenups can safeguard businesses, inheritances, or assets acquired before the marriage.
- Debt Protection: They can shield one partner from the other’s financial liabilities.
- Avoiding Legal Disputes: By pre-emptively agreeing on asset division, couples can save time, money, and emotional distress in the event of a divorce.
- Supporting Family Interests: Parents or trustees often encourage prenups to ensure family wealth is preserved across generations.
Addressing Common Concerns
Many couples hesitate to discuss prenups, fearing that it might create mistrust or conflict. However, the process can strengthen relationships by encouraging open dialogue about financial goals and expectations. Here are strategies to ease the conversation:
- Frame the prenup as a practical tool, akin to insurance, that both partners hope never to use.
- Highlight its benefits, such as transparency and protection for both parties.
- Explain that it’s often a requirement (if so) from family trusts or business partners, removing the impression of personal mistrust.
When to Consider a Prenup
Prenups are particularly beneficial for:
- Entrepreneurs: Protecting business assets from potential division.
- Individuals with Children from Previous Relationships: Ensuring inheritance for children is safeguarded.
- Couples with Significant Assets or Debts: Clarifying asset and liability division upfront.
- International Couples: Addressing jurisdictional complexities in cross-border relationships.
How to Draft a Robust Prenup
A well-drafted prenuptial agreement requires careful planning and professional guidance. Key steps include:
- Engage a Specialist Family Solicitors: Seek advice from family law specialists who understand the nuances of prenuptial agreements and have experience of drafting and advising on the same.
- Provide Full Financial Disclosure: Ensure all assets, liabilities, and income are transparently shared and make sure the disclosure is accurate avoiding material non disclosure.
- Negotiate Early and Amicably: Begin discussions well before the wedding / legal ceremony to avoid unnecessary pressure.
- Include Review Clauses: Account for potential life changes, such as the birth of children, inheritance, or business growth and typically always review every 3 – 5 years in any event.
Conclusion
Prenuptial agreements are no longer a luxury reserved for the wealthy but a practical tool for couples of all financial standings. By addressing asset division, debts, and financial responsibilities upfront, prenups provide security and peace of mind for both parties. While discussing a prenup may seem daunting, it fosters transparency and trust, strengthening the foundation of a marriage.
As English family law continues to evolve, the importance of seeking professional advice cannot be overstated. If you’re considering a prenuptial agreement, consult with an experienced family lawyer to ensure your agreement is tailored to your needs and has the best chance of being upheld in court. Ultimately, a prenup is not just about protecting assets—it’s about planning for a secure and harmonious future together.
Our John Hirst has vast experience of drafting and negotiating Prenuptial Agreements. John has acted for a variety of clients, including investment bankers, tech entrepreneurs, sportsmen and sportswomen, and often deals with prenuptial agreements which involve liaising with lawyers in other jurisdictions. John frequently works with High Net Worth individuals. Please contact Laker Legal Solicitors for a no-obligation discussion.
