A couple who are planning on entering 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.
Everyone has their own personal reasons for entering a pre-nuptial agreement. Some simply like to be as financially organised as possible. However, pre-nuptial agreements might be particularly beneficial where:
One of you has considerably greater capital or income.
One of you wishes to protect assets you owned prior to the marriage.
For the purpose of inheritance planning.
In England and Wales, pre-nuptial agreements are not strictly binding in the event of a later divorce or dissolution. However, a pre-nuptial agreement may be decisive in the event of any dispute dealt with by the court unless the effect of the agreement would be unfair.
When formulating your pre-nuptial agreement the following requirements should be complied with:
28 days before marriage.
Both of you will need to complete full and frank financial disclosure.
Both of you will need to take independent legal advice on the agreement and its effects.
Terms of agreement should be “substantially fair” i.e. provide for each of your basic needs.
There should be no undue influence or duress suffered by either party.
A statement that you both intend the agreement to be legally binding.
Must be executed as a ‘deed’ – must be witnessed by an independent witness.
An agreement you make today might be fair, however in 10 years’ time that same agreement may be deemed unfair, perhaps due to a change in circumstances, e.g. the birth of a child. The Court will look at the fairness of the agreement in the present day, not the fairness of when it was drafted. Therefore, it is common and sensible to insert a review clause into the agreement, to re-assess the fairness of the agreement either at a ‘trigger’ event (i.e. birth of child) or after a certain period of time (i.e. every 3 years).
