It is said from the latest statistics that almost half of all marriages end in divorce and that the average length of those marriages was around 12.9 years, with the average age of becoming divorced looming into people’s mid-40’s. The Office for National Statistics has calculated that those divorces, as well as other family breakdowns, have cost the taxpayer an overwhelming £51 billion per year, which includes the costs of Court fees, legal fees, financial settlements and any maintenance that may become due from the separation, and this cost doesn’t look to be going down any time soon!
Obviously, I hope nobody walks down the aisle thinking to themselves, ‘I hope this marriage doesn’t end up being a statistic…’ but perhaps many do prepare for the big day for the first, second, or even third time, worried about what the future may bring financially for them and if they are protecting themselves and their children.
So, what can you do?
A prenuptial agreement, commonly known as a ‘prenup’ in the UK, is a legally binding document crafted by a couple prior to their marriage. Its primary purpose is to outline how each of their assets will be divided between them in the event of a divorce.
Typically, such agreements encompass various assets like property, debts, and income. By outlining these specifics beforehand, couples aim to pre-emptively address potential financial complexities that may arise if the marriage were to end, and even possibly resolve issues that may have caused the marriage to go awry in the future.
Prenuptial agreements are frequently sought when there’s a significant imbalance in assets between partners. This could include scenarios where one partner possesses substantial inheritance, owns property, operates a business, or in cases of later-in-life marriages or entering second, or third marriages. Prenuptial agreements provide assurance in situations where you’d rather establish beforehand how your assets will be divided in the event of a divorce, as opposed to relying on court decisions.
Are prenuptial agreements legally binding?
Although prenuptial agreements are not presently legally enforceable in the UK, courts are increasingly recognising them as evidence of a couple’s intentions in the event of a future divorce.
In February 2014, the Law Commission released its report titled ‘Matrimonial Property, Needs, and Agreements,’ proposing specific criteria for prenuptial agreements to gain enforceability.
Prenuptial agreements aren’t exclusively for the wealthy or celebrities; they’re valuable for anyone looking to safeguard property and assets brought into a marriage.
In the landmark case of Radmacher v Granatino (2010), the Supreme Court ruled that a prenuptial agreement should be honoured if the agreement was ‘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.’ Following this precedent, Judges are more inclined to uphold prenuptial agreements or assign them significant weight, provided these criteria are met. The onus lies on the party contesting the agreement to demonstrate why it should not be upheld, for instance, by showing evidence of coercion, lack of understanding, or a significant disparity in the parties’ financial situations.
Consequently, despite the judicial discretion to deviate from them, many prenuptial agreements are now enforced by English Courts.
But what if you are already married?
While prenuptial agreements are widely known, postnuptial agreements are less familiar to many. Both agreements serve similar purposes, aiming to address financial and practical matters to facilitate a smooth separation, if necessary.
Unlike prenuptial agreements, which are finalised before the wedding with specific guidance on timing, postnuptial agreements can be arranged at any point after the wedding and before any potential separation.
Postnuptial agreements are beneficial in cases where circumstances have altered since the marriage, such as unexpected inheritances or career shifts, prompting a review of the agreement’s terms. They are also sought when couples encounter relationship challenges but wish to sustain the marriage with financial reassurance.
Nuptial Agreements and injury settlements.
It should be known that it is legally impossible to ring fence the personal injury award in divorce proceedings. If you sustain injuries due to an accident and subsequently separate from your spouse or civil partner, they may seek a portion of your compensation. In this scenario, your personal injury settlement isn’t safeguarded, and without protective measures, it might be treated as a standard marital asset.
However, if a prenuptial or postnuptial agreement is put in place while the relationship remains on steady ground, it demonstrates to the Judge the intention of the award to remain with the claimant, and the person who is in need of that settlement.
