Securing your future: The importance of prenuptial agreements

A recent report from Handelsbanken Wealth & Asset Management highlights some valuable insights into the state of prenuptial agreements in the UK. The statistics underscore how unprepared many couples are when it comes to legal protection in the event of separation. We’ve chosen to share these statistics to help inform couples about the importance of considering prenuptial or postnuptial agreements, especially when protecting their financial futures. 

Key findings from the report

Key statistics from the report include:

• 89% of couples in the UK who are married or in civil partnerships don’t have a Prenuptial Agreement (“prenup”)
  This means that 9/10 couples are getting married with no legal protection whatsoever – they will either need to be able to agree on matters at the point of separation (these negotiations often involve stress, time, cost and uncertainty – all at a point in time when they are least able to deal with it and may not be on good terms with one another any longer) or they could ultimately find themselves at the mercy of the court. The court has an extremely wide discretion, and the outcome at trial can be uncertain.
  
   
• 60% of couples aged 18-34 have no prenup
  
   
• 89% of couples aged 35-54 have no prenup
  
   
• 99% of couples over 55 have no prenup

While prenups are becoming more common among younger generations, the older age group - those most likely to divorce - are less likely to have safeguarded themselves. An important point to note is that couples who are already married can still enter into a postnuptial agreement (“postnup”), which specifies what will happen if they separate in the future. This can be particularly valuable for those in second or subsequent marriages or when significant external wealth, such as an inheritance, is involved.

• 32% of respondents don’t have a prenup because they don’t think a separation will ever happen
  Despite this belief, it is estimated that around half of marriages end in divorce, which highlights the unpredictability of long-term relationships.
  
   
• 17% would share everything equally
  While this may be the court’s starting point in divorce and could be sensible in many cases, a wide range of factors must be considered when determining an appropriate settlement. This could mean that an equal division is not always the fairest outcome. Without specialist legal advice, divorcing couples may not be aware of this.
  
   
• 16% aren’t worried about asset division
  The number of family lawyers in the UK, including the team of family solicitors at Birkett Long, is a testament to the fact that couples should be concerned about asset division on divorce, as it is often contentious and can be costly to resolve.
  
   
• 15% felt they could resolve issues through communication rather than legal agreement
  These respondents may not realise that any financial agreement reached during divorce or dissolution unless formally documented in a Court Order, is not legally binding. If either party later becomes dissatisfied with the arrangement, they can apply to the court to revisit their claims, with no time limit on such claims. This highlights the importance of formalising any settlements with the assistance of a family solicitor

It is also important to be aware that pensions cannot be shared without a court order. For instance, if a couple agrees to share pension income upon retirement but fails to secure a pension sharing order at the point of separation, the pension will die with the pension holder.

• 10% of couples had never even heard of a prenup
  This is particularly concerning and likely indicates that awareness of postnuptial agreements is even lower. Additionally, many cohabiting couples may not be aware that they can enter into a Cohabitation Agreement to protect and govern their rights in a home they live in together.

Securing your wealth for the future
 

If you are bringing wealth into a marriage or civil partnership, or if you have received assets from an external source during your relationship, a prenuptial or postnuptial agreement is the most reliable way to safeguard it. When these agreements are prepared following established guidelines, they are highly likely to be upheld by the courts.

At Birkett Long, our experienced team specialises in drafting, reviewing, and advising on prenuptial, postnuptial, and cohabitation agreements. We are here to help couples clearly define their intentions and protect their financial futures in case of separation.