Whether you’ve set up a business, are preparing for a large inheritance, or simply want to protect your property, you may be wondering if you should get a prenup before tying the knot with your partner. No one wants to think about divorce or separation before going into a marriage, but you’re within your right to protect your assets.
Here, we explore what a prenuptial agreement (or prenup) is, what it does, and if you should get one. We also cover how to protect your business from divorce with these agreements and what occurs during Court proceedings.
What Is a Prenup?
A prenuptial agreement is an agreement made between two individuals before a marriage ceremony takes place, declaring how assets will be separated in the event that the couple wants to split up.
A prenup is signed prior to exchanging vows, and a postnup can come any time after, for example, if there has been a shift in one party’s assets. Of course, every couple hopes to share their wealth in a long and happy marriage with the other. Still, in reality, divorce has become statistically more common and being properly prepared can save acrimony and money in the long run.
What Does a Prenup Do?
As we’ve already discussed, a prenup offers a way to resolve financial matters following a divorce or separation. It works to:
- Protect each party’s assets
It can be especially critical to protect assets if one party brings significantly more assets to the marriage than the other, clarifying ownership before marriage.
It is, therefore, important to ensure that there has been a full disclosure of each party´s financial circumstances, that parties are freely entering into the agreement and, most importantly, that each has been independently legally advised.
- Address finances
A prenuptial agreement can also address how factors like children and employment can impact the couple’s finances.
- Protect you from your partner’s debt
A prenup highlights whose responsibility a debt is, enabling one party to avoid having to handle the financial burden of the other party’s debt.
- Handle property
Who gets the house in a divorce has always been a big question. A prenup helps parties consider how they should handle their property in the event of a breakup, particularly if they are buying or have bought a home together.
Find out more in the video below.
What Are the Different Types of Assets Included in a Prenup?
Matrimonial assets are any assets gained during the period of your marriage – it does not matter who paid for them. They can include:
- Pension
- Property (including the family home) and land (for example, farmland)
- Savings
- Inheritance
- Stocks and shares
- Bonds
- Investments
- Family businesses
Private wealth is also considered, along with whether the family home was used to secure business borrowing. Protecting your business assets during a divorce is of the utmost importance, as both parties take all assets into account.
In England and Wales, any financial assets gained during a marriage are viewed in Court as belonging to both spouses. Matrimonial assets won’t necessarily be split equally between both parties. However, the Court will rule for a fair financial settlement after divorce. Make sure you double-check how assets are divided in divorce in Scotland if you reside here.
Non-matrimonial assets, therefore, are any assets obtained either before the marriage takes place or after the divorce. These may be taken into consideration when negotiating the financial settlement in certain circumstances, for example, if the divided matrimonial assets will not sufficiently provide for your ex-spouse or any children’s welfare.
Learn what happens to business assets in a divorce below.
What Does a Prenup Not Do?
There are certain things a prenuptial agreement does not cover, including potential disputes surrounding:
- Personal matters
- Illegal matters
- Child custody
- Child support
If you need advice regarding these areas, a member of our team will be able to offer you further assistance.
How Do You Make a Prenup?
Communicate with your partner: Firstly, you need to address this matter with your partner. We know this can be a difficult topic to bring up, but we recommend doing so as early as possible to give your partner time to get used to the idea and avoid conflict later down the line.
Have your agreement created: When you have both agreed to get a prenup, you should contact a professional family law expert to develop your prenup and ensure it is fair to both parties. You need your prenup to be made at least 28 days before your wedding, but we recommend sorting matters within plenty of time.
Seek advice: Our team of experts can also offer independent legal advice, which we recommend both you and your partner seek separately, ensuring you both thoroughly understand and agree to what you are signing.
Disclose all assets: All assets need to be fully disclosed by both you and your partner.
Review and amend: If there are any significant changes which may outdate the agreement, such as the birth of a child or an unexpected change in income, the agreement should be reviewed and amended to ensure it is kept up-to-date with the current circumstances. If this occurs after marriage, it is known as a postnuptial agreement.
Why Would a Couple Want a Prenup?
You do not need to be rich and famous to have a prenup. It should simply be seen as prudent planning rather than the end of romance (you don´t take out home insurance expecting your house to fall down). With this in mind, anyone who wants to protect their assets and determine how their finances and property may be handled in the future should consider getting a prenup.
For example, for those who own a business, a prenuptial agreement can help protect business assets. Planning ahead with prenuptial and postnuptial agreements can be helpful in limiting claims against the business and, should things go wrong, your spouse agreeing not to make damaging claims against the business can be very helpful. A postnuptial agreement can be made during your marriage to protect your business assets in case of a divorce.
Who Benefits the Most with a Prenup?
While prenups are said to benefit those with the most assets pre-marriage, these types of agreements can benefit all divorcing partners in the separation process by:
- Saving money
- Saving time
- Decreasing stress
- Reducing conflict
- Increasing certainty
Creating the foundation for a smooth process can also help children cope with divorce.
Despite the benefits, there are some considerations you should keep in mind before getting a prenup:
- You may be perceived as distrusting
We all know that getting a prenup doesn’t seem like the height of romance. If you ask your partner for a prenup, you may be seen as distrusting of your partner and the relationship, which can lead to difficult conversations and hurt feelings.
- There’s no guarantee your prenup will be upheld in Court
There’s no way to guarantee your prenup will be upheld in a Court, which could potentially give you a false sense of security. The agreement may not be recognised if it is considered unfair to a party. This means that for it to be recognised and upheld, both parties need to outline their finances in detail and seek professional and independent legal advice.
- Making the prenup itself requires time and money
Currently, the average prenup in the UK costs around £1,000 to £5,000 and typically takes a couple of weeks to a couple of months to get drawn up, depending on its complexity.
Is a Prenup Worth It in the UK?
While prenups are not automatically legally binding in the UK, they are becoming increasingly recognised and last as long as your marriage.
If you are divorcing, a properly entered–into agreement like a prenup is far more likely to be given weight than a hastily signed note on the back of a wedding invitation when it comes to dividing assets. So, if all of the right checks have been carried out, a prenup can certainly be worth it in the UK, even though you never envision separating from your partner at this point in life.
Get Advice on Prenups at Newtons Solicitors
Hopefully, you now know why a prenup can be so beneficial. While protecting your personal and business assets during a divorce can be daunting, taking specialist legal advice as early as possible in a divorce is paramount.
If you want to learn more about what a prenup is and how it works, please don’t hesitate to get in touch with our divorce and family law team. Our solicitors are experts in divorce and separation, with expertise in tailoring each case regarding assets and divorce.
This article is for general information only. No responsibility can be accepted by Newtons Solicitors for any loss suffered by anyone acting or refraining from action as a result of anything on this website. We recommend you take independent legal advice in relation to any particular personal circumstances.