Many people may not realise that while prenups (pre-nuptial agreements) can be highly persuasive to a court, they aren’t legally binding under the law of England and Wales.
Yet we may be on the verge of change, as Conservative MP Sir Robert Buckland KC recently commented that prenups should now become fully legally binding and enforceable.
Here, family and divorce law expert Kirsten Tomlinson explains how prenups work, who should get one and why making them legally binding may not be such a wise idea.
Prenups — matrimonial insurance policies
When you hear the word ‘prenup’, you may think that they’re only used in the US or among celebrity couples. Yet prenups are becoming ever more popular on this side of the pond too — the difference is that they’re legally enforceable in the US, but not here.
A prenup is a legal document that sets out the financial consequences after a marriage breaks down. Think of it like an insurance policy — no one sets out to divorce when they initially get married, nor do they want to think about how the matrimonial pot will be divided.
This is often an impossible task anyway, as family and financial circumstances can change throughout a marriage. Any engaged or married couple that enters into a prenup would hope that this piece of paper will stay in a box, collecting dust, never to be seen again.
Who should get a prenup?
However, there are some circumstances where it may be sensible to take out a pre-nuptial insurance policy in the hope that it would save a considerable amount of turmoil, stress and legal fees if the need ever arose.
A ‘good’ prenup should clearly set out the financial arrangements and contain fair terms.
We’ve helped engaged couples in various circumstances to implement a prenup, including those with:
- a family business or trust fund
- substantial pre-marital assets (such as property and investments)
- early inherited wealth
- children from first marriages (whose wealth you wish to protect before entering into a second marriage).
Why bother if prenups aren’t legally binding?
While prenups aren’t (currently) legally binding, they’re highly persuasive to a court and will be taken into account when dealing with the division of the matrimonial pot upon divorce.
The reason why prenups are increasing in popularity is that it’s a better to have one in place than not if one party is concerned about protecting certain assets. While it may cost a few thousand pounds to enter into a legitimate prenuptial agreement via a family solicitor, this could save you hundreds of thousands of pounds further down the line.
Why aren’t prenups legally binding?
Matrimonial law differs in each jurisdiction around the world. In England and Wales, we have a set of considerations that the family court will explore when faced with dividing a matrimonial pot, known as Section 25 factors of the Matrimonial Causes Act 1973. These include each person’s income, earning capacity, property (and other financial resources), financial needs, obligations, responsibilities and standard of living.
This means that the court will take a cautious and holistic approach when making decisions about financial settlements to ensure that no one is left in a financially destitute position.
If prenups were made legally binding and fully enforceable, it would remove the need to apply these factors — thereby removing the last layer of protection for the financially weaker party.
Prenups and financial settlements
It’s important to acknowledge that the facts of each case are always different. It’s often a fine balancing act to conclude what a fair and reasonable settlement looks like.
We often say that you can put the same case before ten different family judges and they may each calculate a slightly different financial settlement. That’s why we often advise clients about the ‘range’ that any matrimonial settlement could fall within.
If prenups are made legally binding, this will offer more certainty as to who receives what if the marriage breaks down. It will also minimise (or, in some cases, completely remove) the ‘range’ that the financial settlement will fall within.
A step too far?
Could making prenups legally binding therefore be a step too far?
Since properly prepared prenups are so persuasive and can be taken into account by the court — and given that Section 25 factors act as a safety net if the financial consequences of implementing the terms of a prenup seem unfair — we may do well to stick with the status quo.
Talk to us
It’s vital that you obtain expert legal advice before entering into a prenup (or, indeed, a postnup).
Our family law team has a wealth of experience in dealing with nuptial agreements and offers holistic advice alongside our private client and corporate law experts for clients where these types of agreements are recommended.
We advise both those who wish to prepare a nuptial agreement and those who have been presented with one to sign.
Talk to us by completing our contact form below.
