A prenuptial agreement, also referred to as a prenup, is a document signed by a couple before they marry, setting out what will happen to their assets in the event that they divorce.
It can be beneficial to a relationship to enter into a new phase on an open and honest basis, disclosing all assets and liabilities and agreeing on a settlement that will ensure both parties are looked after in the future. A prenuptial agreement can also prevent misunderstandings and disagreements from arising and provide reassurance in respect of financial issues.
Who should make a prenuptial agreement?
While a prenuptial agreement can be of wide benefit to everyone, it is particularly important where there is an imbalance in the relationship, such as in the following circumstances:
- One party is coming into the marriage with more in the way of assets than the other;
- One party is a business owner;
- One party has children from a previous relationship;
- There is a chance that one of the parties may inherit a sizeable sum in the future.
A prenuptial agreement can also be used where the parties simply want the security of knowing how their finances will be separated if they divorce.
What should be included in a prenuptial agreement?
A prenuptial agreement will be tailored to suit the exact situation and requirement of the parties involved. Issues such as the following will usually be included:
- How money will be divided, to include bank accounts, savings, investments and pensions;
- What will happen to the matrimonial home;
- What will happen to any other property the couple owns;
- How will an inheritance be dealt with if one is received during the marriage;
- What will happen to debts, to include debts incurred by one party only;
- How children will be provided for, to include children from previous relationships. It should be noted that child arrangements and maintenance cannot be put into a prenuptial agreement.
Is a prenuptial agreement legally binding?
Prenuptial agreements are not legally binding, but where the court is satisfied on a number of points, it is likely to follow the terms of an agreement when making an order. These points include the following:
- The agreement is fair and provides for both parties’ financial needs;
- The document was drawn up by a solicitor;
- Both parties took independent legal advice before signing;
- Both parties fully disclosed all of their assets to each other before the agreement was signed;
- The agreement was entered into freely and without undue influence;
- The parties both understood the implications of signing;
- The agreement was signed at least 28 days before the marriage.
If you are already married, then you can enter into a similar agreement, known as a postnuptial agreement.
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