First things first – what actually is a prenup?
A prenup is an agreement entered into before marriage which sets out how a couple would like their finances to be divided in the event of a divorce. They are not currently binding in England and Wales, but are usually taken into account upon divorce – especially if certain criteria is met. In summary, the main criteria are:
1. The agreement must be freely entered into.
2. Both parties must have a full understanding of the implications of the agreement.
3. The agreement must be fair in the circumstances prevailing. This includes ensuring that both parties’ reasonable needs are met (which are different in every case), particularly those of any children. A prenup that says that one party is to receive nothing upon divorce is unlikely to be upheld, because this would not meet that individual’s needs.
When and why would you need one?
It is usually the wealthier party who suggests a prenup in order to protect their finances in the event of divorce. However, it’s a misconception that prenups are only for the very rich. Often people want a prenup for one of the following reasons:
1. If they own shares in a family business, they and their family might not want these to be subject to division in the event of divorce.
2. If people meet later in life and one or both of them have children from a previous relationship, they may wish to protect pre-acquired wealth so it can be inherited by their children.
3. If one or both parties have family wealth which they have or will inherit, people often don’t want this to be divided in the event of divorce.
4. If the marriage needs to take place more quickly than it otherwise might for religious or immigration reasons.
How can you go about getting one?
Contact a family solicitor with a good reputation and arrange a meeting to talk through your requirements and what you want to achieve. This will initially be a one-off meeting during which options can be discussed, and a way forward agreed. You can then decide whether you would like to go ahead.
What needs to be included within your prenup?
This will depend on your circumstances and what you want to achieve. Common things to include are:
1. If one party has shares in a company, the prenup may say that these will not be subject to division in the event of divorce.
2. If one party has a property portfolio, the prenup may say that the portfolio will not be subject to division in the event of divorce.
3. If one party has a lot of money from the sale of a business, the prenup may include an agreement that the other party will be given a certain amount to meet their housing needs in the event of divorce. This would prevent them from suggesting they need a much higher housing fund.
4. If one party has inherited wealth, the prenup may say that this will not be subject to division.
5. If one party owns certain assets that are worth a lot, the prenup may make it clear which are to be excluded from the sharing principle.
6. The prenup may also include a clear definition of what the financially weaker party’s needs are, so there is less opportunity for disagreement later on. These needs may include capital need for a house, as well as ongoing financial support.
Do you have to disclose all of your finances?
Yes, you do need to disclose all of your finances prior to the prenup being agreed, and a schedule should be attached to the prenup. Without this, the prenup is less likely to be upheld in the event of a dispute upon divorce.
How long do they last?
There is no set shelf life, but we would recommend that prenups are reviewed every five years to ensure they are fair and meet the parties’ needs in light of current circumstances. Prenups should also be reviewed in the event of a significant change in circumstances, such as the birth of a child, long term ill-health, the unemployment of either party or a change in finances.
Are prenups only available before a wedding?
Yes, but it’s worth noting that people can also prepare a ‘postnup’ after their marriage, which are treated in the same way as a prenup. These can be prepared if people do not have sufficient time before the wedding.
Is there anything else to consider?
If you are considering a prenup, it’s always best to contact a family solicitor with a good reputation and have an initial discussion as soon as impossible. A prenup should ideally be finalised and signed well before the wedding, so it is important to have this first meeting as soon as possible to get the ball rolling.
For more information, visit HedgesLaw.co.uk
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