No one marries with the thought of separating, and the perception of signing a nuptial agreement can seem to be unromantic. Nevertheless, there is an increasing preference for couples to enter into a nuptial agreement, either before or after the marriage has taken place, as couples recognise that marriage is both a personal and a financial partnership and that such an agreement can provide clarity, reassurance, and protection for both parties in the event of their separation.
What is a Nuptial Agreement?
A nuptial agreement is a formal written contract which is entered into by a couple which regulates their affairs in the event of the breakdown of their relationship. There are two types of nuptial agreement:
Prenuptial agreements – entered into before a marriage.
Postnuptial agreements – entered into after the marriage has taken place and may be suitable where circumstances have changed after the marriage i.e. assets have been acquired or inherited.
The primary focus of a nuptial agreement is to allow couples to agree to how their financial arrangements should be treated in the event of separation or divorce.
Who should consider a Nuptial Agreement?
A nuptial agreement should not only be considered for couples who have a high net worth; it can be appropriate where one or both parties:
- Have pre-existing assets (e.g. property in their sole name)
- Have business interests
- Expect to receive an inheritance
- Are entering into a second marriage
- Are seeking clarity or certainty in the event of a relationship breakdown.
What can a Nuptial Agreement cover?
A nuptial agreement can address various matters and be drafted to the specific needs of the parties. The agreement is often used to regulate the division of assets including:
- Assets owned before the marriage
- Inherited or family wealth
- Business interests and shareholdings
- Property ownership and housing arrangements
- Savings and investments
- Pension provision
It is important to note that whilst nuptial agreements cannot prejudice the reasonable requirements for any children of the family, the agreement can record intentions regarding financial support, which the court may take into account.
Are Nuptial Agreements legally binding in England and Wales?
Whilst nuptial agreements are not formally binding, and parties cannot oust the jurisdiction of the court, recent case law has continued to demonstrate that the court is willing to give them significant weight. The landmark case of Radmacher v Granatino [2011] has emphasised that the courts should give effect to a nuptial agreement freely entered into by both parties where:
- Both parties entered into it freely;
- They had a full understanding of its implications; and
- The agreement is fair.
Therefore, when correctly drafted and properly advised, a nuptial agreement can be a powerful and persuasive document if there are any future financial remedy proceedings.
When is a Nuptial Agreement likely to be upheld?
It is important for a nuptial agreement to carry the maximum possible weight. There are several safeguards that should be in place:
- Both parties have provided full and frank disclosure
- Each party has taken independent legal advice, or has had the opportunity to do so
- Sufficient time has been given to consider the agreement
- There is no pressure, undue influence or duress for a party to sign the agreement
- The agreement is fair to both parties.
To ensure that the parties’ intentions are properly recorded and that the nuptial agreement is given the maximum possible weight by the court, it is essential that each party takes independent legal advice. Taking advice, for either party, at an early stage also allows sufficient time for proper financial disclosure and considered negotiation.
If you would like to discuss a prenuptial or postnuptial agreement, you can contact the Family Team at Martin Kaye on 01952 272 222 to arrange a free initial one-hour consultation.