I’m remarrying – should we have a prenup?

So, what is a prenup?

A prenup is a legal agreement made between two people prior to their marriage or civil partnership, which typically outlines how the couple wish their assets to be divided between them if they later separate or divorce.

Fundamentally, it lets couples set expectations right from the outset and gives a basis for financial measures, should the unfortunate event of the relationship ending occur. 

Everyone has their own reasons for entering into a pre-nuptial agreement. It may be that you and your proposed spouse simply like to be as organised as possible with your finances or you may be remarrying and do not wish for your assets to remain separate for the benefit of your children. 

Whatever the reason entering into a pre-nuptial agreement does not mean you are more likely to get divorced. In reality it is a sensible financial planning decision, much like drafting a Will and by no means is it a precursor to a doomed relationship. 

In fact, a pre-nuptial agreement might be particularly beneficial where: 

• one of you has substantially greater capital or income than the other
• one or both of you wishes to protect assets you owned prior to the marriage, including inheritances or family trusts, business assets,
• one or both of you has children from a previous marriage or relationship and wishes to protect assets for the purposes of inheritance planning
• one or both of you has a connection with, or property in, another jurisdiction;

This list is not exhaustive but is some of the key reasons lawyers see people come to them with the desire to enter into a prenup.

Why should I get a prenup of they are not binding?

You may have heard that these agreements are not actually binding in England and Wales, so why would you bother spending money on legal fees or run the risk of upsetting your future spouse / civil partner with unsettling notion you are preparing for the worst?

The reason you should consider entering into a prenup is that although they are not strictly binding in the event of a later divorce or separation, the terms of the agreement may be decisive in the event of a dispute that is dealt with by the court unless the effect of the agreement would be unfair. In many situations the court will give weight to a suitably prepared prenup. This notion of unfairness stems from a decision of the Supreme Court in 2010 (Radmacher v Granatino) where the court said: ‘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’.

Everyone involved in the prenup should ensure they not only enter to it well advance of the wedding: 

• Disclose all of their financial information; and
• enter into the agreement freely (so no pressure from anyone) and; and
• take independent legal advice
   

as this will all help alleviate the courts concerns of unfairness. It is common to build in provision for the agreement to be reviewed, either after a period of time has elapsed or when a specified ‘trigger’ event occurs, for example the birth of a child, or if either you or your spouse was to have health issues that impact on your earning capacity.

Side note: do not worry if you are already married, you can also enter into a post-nuptial agreement. A postnup is very similar to a prenup but it is just entered into following the marriage or civil partnership having taken place. 

How does a prenup protect children from a previous relationship?

A pre-nuptial agreement can give greater certainty as to financial arrangements in the event that you do divorce, 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. This is especially appropriate in blended families, where there is likely to be competing expectations between the new spouse and existing children.

However, because the court will always have jurisdiction in the event of a divorce, entering into a pre-nuptial agreement can sometimes provide a false sense of security. If there is a divorce, and you cannot reach agreement as to how finances can be dealt with, and one of you no longer wishes to proceed in accordance with the terms of the pre-nuptial agreement, the issues may need to be determined by the court although where the court considers the pre-nuptial agreement to have been ‘fair’, it may make an order reflecting the terms of the agreement.

In summary

Remarriages becoming more common in later life is exciting news, however it does have the burden of typically coming with more complex financial considerations than a first marriage. 
You may be considering the need to protect preexisting assets, provide for your own children or even just create some clearness around your finances, a prenup can be a rational and viable agreement to consider.

Prenups are not truly binding in the courts of England and Wales but they can be extremely influential and play a large role in avoiding unnecessary uncertainty and costly litigation on separation.  They should be considered alongside greater estate planning such as but not limited wills, expressions of wishes and powers of attorney. 

How our Family team can assist you

If you are looking for advice on prenups and postnups, please contact Caroline Rushton or someone in our Family team on 020 8290 0440.

Disclaimer
This article is intended for general information purposes only and does not constitute legal or financial advice. The law may have changed since the date of publication, and the application of the law will depend on your individual circumstances.

You should seek independent legal and financial advice before taking, or refraining from taking, any action based on the content of this article.