Prenuptial Agreements: For the ultra-wealthy or everyone?

Prenuptial agreements, commonly known as prenups, have traditionally been associated with celebrities, the ultra-wealthy, or seen as a concept largely associated with American culture. This perception has limited their popularity and understanding in the UK. However, attitudes are changing, and an increasing number of couples are now considering the potential benefits of prenups.

The US vs. UK approach to prenups

In the United States, prenuptial agreements are widely used and often legally binding, depending on the state. Even in states where prenups aren’t automatically binding, courts generally uphold them, giving these agreements significant legal weight. By contrast, the situation in England and Wales is more nuanced.

Prenups are not yet legally binding in England and Wales, meaning courts retain the discretion to override them. However, the tide is turning. Over recent years, there has been growing recognition of prenups in the Family Courts, and their popularity is steadily increasing among UK couples.

A growing trend among UK couples

Recent research by the Marriage Foundation highlights this shift. According to their 2021 report, one in five couples who married in the UK since 2000 had a prenuptial agreement or a similar arrangement. This figure has more than doubled since the 1990s. While still less common than in the US, prenups are increasingly seen as a practical tool for financial planning and protection.

What is a prenuptial agreement?

A prenuptial agreement is a legal document entered into by a couple before marriage or civil partnership. It sets out how their assets will be divided if the relationship ends. Prenups can cover a range of financial matters, including:

• Property owned individually or jointly
• Debts and liabilities
• Income and financial contributions
• Assets acquired during the relationship or brought in individually, such as inheritances

The idea of a prenup can sometimes lead to tension, with one party viewing it as unromantic or even a sign of distrust. However, it’s essential to reframe prenups as a way to support a successful relationship rather than undermine it. By addressing financial matters upfront, couples can avoid uncertainty and conflict later.

When is a prenup likely to be upheld?

While prenups are not legally binding in England and Wales, the Family Courts give them considerable weight if they meet certain criteria. To have the best chance of being upheld, a prenup must:

1. Be entered into willingly by both parties without pressure, duress, or undue influence.
2. Be signed at least 21 days before the wedding or civil partnership ceremony. (If not, couples should consider a postnuptial agreement.)
3. Be contractually valid, free of mistakes or misrepresentations.
4. Be executed as a deed and include a signed statement from both parties acknowledging its implications.
5. Involve full financial disclosure, ensuring both parties understand the other’s financial circumstances.
6. Consider the needs of both parties, including children, ensuring the agreement is fair and does not leave anyone in financial hardship.
7. Account for the standard of living enjoyed during the relationship.

Are prenups becoming standard practice?

Although not yet legally binding, prenups are being given increasing weight in the Family Courts, particularly in cases where both parties received legal advice, and the agreement meets the criteria above. Many experts believe it’s only a matter of time before prenups become legally binding in England and Wales, as they are in the US. When that happens, it’s likely prenups will become a standard part of marriage preparation for many couples.

Why consider a prenup?

While some may view prenups as pessimistic, they can actually strengthen relationships by encouraging open communication and financial transparency. By addressing “what if” scenarios before they arise, couples can focus on building a future together with peace of mind.

Whether you’re planning to tie the knot or enter a civil partnership, seeking legal advice about a prenuptial agreement could be a wise step to protect your financial interests and ensure clarity for both parties.