“We want prenup! We want prenup!” (Yeah!)
In Kanye West’s hit single ‘Gold Digger’, released in 2005, he passionately advocates the importance of signing a pre-nuptial agreement before entering into a marriage. He sings, “it’s something that you need to have, cause when she leave yo’ a**, she gon’ leave with half”.
While pre-nuptial agreements were once thought to only be relevant for billionaires and celebrities, and more commonly executed across the pond, there has been a distinct rise in pre-nuptial agreements in the UK in recent years. One common reason why couples choose to enter into pre-nuptial agreements is because one or both parties has significant family wealth, trust interests, or business assets they would like to protect. Many wealthy families now see it as a crucial part of their financial planning that anyone marrying should enter into pre-nuptial agreements, often with parents (or grandparents) wishing there to be very similar terms for each child (subject to their spouse’s financial position) to ensure fairness and equal treatment of the children and their spouses (and often with a view to retaining “family wealth” for the bloodline).
Even amongst those who do not have significant wealth, trust interests or business interests, there has been a steady increase in the number of couples considering entering into pre-nuptial agreements. There appears to be a shift towards pragmatism and a shared wish to set out the terms on which assets will be divided should things go awry. Perhaps this is due to pre-nuptial agreements being more openly discussed in the media, or because there have been more reported cases of the English court upholding pre-nuptial agreements. Either way, it is clear that the younger generation is more open to discussing their finances and what should happen in the event of a separation and divorce. Gone are the days where the idea of proposing a pre-nuptial agreement is considered taboo, un-romantic or offensive.
The law in England which governs the division of assets on divorce does not simply involve the court applying a formula which divides all the assets 50/50. However, the English court is known to be comparatively more generous to the weaker financial party on divorce than many other jurisdictions. Having a pre-nuptial agreement in place allows a couple to make decisions together, while the relationship is solid and amicable, about what would happen in the event of a separation and divorce. The terms of the agreement should allow for fairness and certainty on both sides and seek to avoid expensive and emotionally draining litigation.
While pre-nuptial agreements are not currently legally binding or enforceable as contracts in England, as a result of the landmark Supreme Court case of Radmacher v Granatino in 2010, pre-nuptial agreements should be upheld by the English court if the following criteria are met:
- Both parties have had independent legal advice;
- Both parties have had disclosure of the other’s financial position (or understood broadly what they had) so they understood the consequences and implications of the agreement; and
- The pre-nuptial agreement does not give rise to an unfair outcome for either party.
Ideally, pre-nuptial agreements are finalised and signed as early as possible before the date of the marriage or civil partnership. It is good practice to sign the agreement at least 28 days before the civil wedding. If that is not possible, careful consideration should be given to entering into a post-nuptial agreement (signed after the legal marriage) affirming the terms of the pre-nuptial agreement.
It is important for any ‘international couples’ or those with links to multiple jurisdictions to seek local specialist family law advice in relation to the validity and enforceability of a pre-nuptial agreement in the various jurisdictions. Even if neither person in a couple is a UK national or UK domiciled, if either person is resident in England or has assets in England, it is important to seriously consider taking English family law advice.
Despite the gloomy London weather, it is indeed wedding season, and it is not too late to consider entering into a pre-nuptial agreement!
Barrister James Roberts KC of 1 King’s Bench Walk told the Times recently: ‘Parents cannot force what is after all an adult child to enter into a prenup – but they can of course choose not to make a gift or an advancement of inheritance without one.’
