Guide to Prenuptial Agreements

Over recent years, prenuptial agreements have consolidated their role as one of the components of modern marriage. Previously subjected to stereotypes, these legal documents are becoming more common in the United Kingdom. There are many reasons why two future spouses might contemplate drafting a prenup, but in order for this agreement to work, it is essential that both parties understand its benefits, contents and enforcement procedures.

In this guide to prenuptial agreements, we will aim to provide you with all of the key information on what prenuptial agreements are, what they contain, how they are created and how they are enforced.

What is a prenuptial agreement?

Prenuptial agreements or premarital agreements (commonly abbreviated as prenups) are written contracts made between two parties prior to entering a marriage or civil union. Although some variations may occur, the main intention when drafting a prenuptial agreement is to establish how the couple's assets will be divided in the event of divorce. By doing so, the couple can reduce dispute costs when and if the marriage or union ends and protect certain assets acquired prior to entering the marriage / union. Assets can be financial or material resources (tangible and intangible) that have been gained or inherited.

Prenuptial agreements in the UK

Traditionally speaking, UK courts do not enforce prenuptial agreements. However, in recent years there have been considerable changes, and courts may now consider these agreements when a couple files for divorce. In 2010, the Supreme Court found a premarital agreement to be legally binding for the first time, in the case between Katrin Radmacher and Nicolas Granatino. The Court concluded that in some circumstances, premarital agreements can have decisive or compelling weight to the outcome of the case.

Benefits of prenuptial agreements

Prenuptial agreements are by no means a universally beneficial course of action, but they do offer considerable advantages in some situations.

• They can protect a person's assets in the event of divorce;
• They are very useful when there is a considerable gap between the contributions brought into the marriage/civil union. In some cases, wealthy persons choose to sign a prenup because they want to protect themselves from opportunistic intentions. However, this is not to say that premarital agreements are only recommended for financially privileged couples;
• They can ensure that children from previous marriages receive a part of their parent's assets. The Court will always analyse clauses concerning children with more attention, with a view to protecting the children's rights and interests;
• They can reduce conflict during divorce procedures and save money;

Contents of prenuptial agreements

Prenuptial agreements are based on contractual principles, so both parties have the freedom to decide which clauses to include. Typically, a prenuptial agreement may include:

• A list of each partner's assets and the assets that will belong to only one partner if the marriage / civil union ends;
• Clauses referring to division of property;
• Spousal support clauses;
• Additional clauses for the event in which the separation is caused by adultery;
• Guardianship provisions or financial arrangements for children;

The contents of the agreement should be established only after the partners have had an open discussion and have received professional legal advice. Couples should never use prenuptial agreement templates found online. Although these can sometimes be used as guidance, the final prenuptial agreement should be drafted based on the couple's specific circumstances.

How are prenuptial agreements enforced?

In the United Kingdom, the Court can decide whether the prenuptial agreement will be taken into account for divorce proceedings and exclude certain clauses if it suspects they are not just. In other words, signing a prenuptial agreement does not guarantee its enforcement. A prenup is a contract and it cannot overwrite the letter and spirit of the law. The Court still has supreme authority and it will analyse not only the clauses, but also the circumstances in which those clauses were established. Enforcement criteria includes:

• The legitimacy and fairness of the prenup;
• Compliance with the rules of contract law;
• The degree to which spouses understood the clauses prior to signing;
• The existence of professional legal advice for both parties; 
• The time partners had at their disposal to analyse the terms of the agreement; 
• The possibility that one partner could have been coerced to enter into the agreement; 
• The circumstances of the prenuptial agreement

Briefly, when enforcing a prenuptial agreement, the Court will make sure that partners are treated fairly and that there are no abusive clauses. For clauses referring to children, scrutiny is ever higher, because the aim is always to protect children's rights.

Provisions on how the Court may divide assets after the breakdown of the marriage are established under the Matrimonial Causes Act 1973.

Postnuptial agreements

The content of the postnuptial agreement is similar to the one of prenuptial agreements, but, as the term would suggest, they are signed during the marriage/civil union. Prenups are more like a preventive measure that might not even need enforcement because the couple might not break up. However, postnuptial agreements usually take place when partners have been living together for a while and are actually contemplating the possibility of filing for divorce. The likelihood of postnuptial agreements holding up in Court is generally higher than in the case of prenups.

A word of caution on drafting prenuptial agreements

Prenuptial agreements can be beneficial, but they should be approached with caution because they have several challenges.

Timing is perhaps the biggest one and, if not chosen wisely, it can even ruin the harmony of the relationship. One should never open the topic of prenuptial agreements right before the wedding. On the one hand, there is not sufficient time for both partners to establish and analyse terms or to balance legal and wedding preparations. If an agreement is entered into under such circumstances, the Court might consider that one partner was rushed or under undue influence. On the other hand, prenups can be a very sensitive topic that requires calm and diplomacy, so discussing them before the wedding can lead to arguments.

When drafting a prenup, both partners have to understand the terms and enter into the contract voluntarily, having full understanding of its consequences. Sometimes, people reluctantly sign prenups just to please the person they are emotionally attached to. Any contract signed under undue influence can lose legally binding status intended, so it is essential that both parties receive sound legal counsel.