A prenuptial agreement, also known as a “prenup”, is a contract between two people who are planning to enter into a marriage or civil partnership and it deals with the financial consequences in the event of their marriage ending.

Where the marriage or civil partnership has already taken place, a postnuptial agreement should be considered instead.

Why entering into a Prenuptial Agreement?

Entering into a prenuptial agreement, as unromantic as it might sound, can ultimately prove beneficial for both parties.

There are several reasons why more and more people enter into a prenuptial agreement, here are just few considerations, please note that this list is non-exhaustive:

1. One partner is wealthier than the other – In the UK wealthy individuals risk losing 50% of their assets (sometimes more) if they divorce. Therefore, where one party is wealthier than the other they might want to enter into a prenuptial agreement in order to preserve their pre-existing wealth in the event of a divorce.

2. One or both partners have been married before – If one or both parties have been divorced before they may wish to enter into a prenuptial agreement to preserve their current assets in the event of their marriage ending.

3. Children and dependants – If a party has dependants or children from a previous marriage entering into a prenuptial agreement can ensure that their interests and well-being are not jeopardized on divorce. A prenuptial agreement can ensure that assets are distributed according to a party’s wishes and that neither the first family nor the new family are cut off.

4. Inherited assets – One party may already have inherited family assets, or may have a reasonable anticipation of inheriting such assets during the marriage and by entering into a prenuptial agreement they want to preserve inherited family wealth. A prenuptial agreement allows for these inherited assets to be protected and kept out of any future financial settlement on divorce. Without a prenuptial agreement inherited family assets are most likely taken into account by the court in any future financial settlement on divorce.

5. Overseas wealth – Just because assets are situated in another country does not mean that a UK court will not take them into account on divorce. If a party has property and assets outside the UK before marriage then on divorce the English courts are most likely to take into account worldwide assets and divide them on a 50-50 basis, regardless of how the overseas assets would be treated under the law of the country in which they are situated. A prenuptial agreement allows the parties to decide how their overseas assets will be dealt with.

Are Prenuptial Agreements enforceable in the UK?

Prenuptial agreements are legal and enforceable in the UK.

In the UK prenuptial agreements are enforceable provided they are properly entered into and there is no overriding reason that would prevent the court from adopting the provisions of the agreement.

The courts in the UK have complete and total discretion to decide how to divide the assets of the marriage; the aim of the courts is to achieve fairness in any financial divorce settlement. UK courts have complete discretion in applying the terms of a prenuptial agreement and will only enforce it to the extent they consider that it is equitable to adopt the agreement in the specific circumstances of any given case.

Therefore UK courts are likely to adopt the provisions of prenuptial agreements provided that they would not lead to an unjust result. In other words, the courts will take into account the provisions of a prenuptial agreement when deciding a divorce settlement but the courts will not enforce it if they consider that such prenuptial agreement may lead to a result that is unfair or unjust.

In deciding what is fair the starting point for any UK Court is Section 25 of the Matrimonial Causes Act 1973. Section 25 sets out the guidelines that the English courts must apply in deciding who gets what in any divorce proceedings, even if a prenuptial agreement has been entered into before the marriage. However, the courts are increasingly likely to enforce the provisions of prenuptial agreements provided that they do not conflict with the Section 25 criteria and would not unfairly prejudice the parties or any child of the marriage or otherwise create an inequitable or unfair outcome.

Prenuptial agreements are important in ensuring that personal assets, in the UK and worldwide, are dealt with equitably by the UK courts in the event of divorce; such agreements can in the right case have decisive weight in a divorce settlement.

The Legal Stop offers a FREE Prenuptial Agreement Template, however as everyone’s situation is different, prenuptial agreements need to be tailored to suit specific personal circumstances.

Furthermore, in order to ensure that a prenuptial agreement is taken into account by a court it must follow the requirements that the UK courts have laid down otherwise the courts will disregard or limit the application of the agreement. Therefore it is advisable to take independent legal advice in relation to this area of law.