Article written by Atifha Aftab, Family Solicitor
A “nuptial agreement” refers to both pre-nuptial agreements (also known as pre-marital agreements or ante-nuptial agreements) and post-nuptial agreements (also known as post-marital agreements) and their civil partnership counterparts, pre-registration or pre-civil partnership agreements and post-registration or post-civil partnership agreements.
A nuptial agreement is an agreement made by a couple either before or after they marry or enter into a civil partnership, which sets out how they wish their assets to be divided in the event that they divorce or have their civil partnership dissolved.
What is the purpose of a nuptial agreement?
The primary purpose of a nuptial agreement is to provide clarity for couples in respect of how their assets will be divided in the event of a relationship breakdown. It enables them to determine and clearly set out how their property and finances will be dealt with during their relationship and in the event of a divorce or dissolution.
Nuptial agreements often seek to:
- Stipulate how the family home and other assets, including those held jointly, will be divided in the event of relationship breakdown;
- Protect inheritance which is expected or specific assets, such as property acquired independently of the other party in advance of the relationship;
- Ringfence inherited money, assets or savings;
- Ringfence a business or allow a party to retain full control of it; and
- Protect a party from their partner’s debt.
Why should I enter into a nuptial agreement?
You should consider entering into a nuptial agreement if you wish to protect yours, or your partner’s wealth in the event of your relationship irretrievably breaking down. Nuptial agreements offer parties a degree of certainty and allow them to logically consider and agree a fair and appropriate settlement and/distribution of assets in advance of divorce or dissolution. They provide parties with control in relation to their future financial position, rather than leaving it to the discretion of the Courts.
What are the benefits of entering into a nuptial agreement?
Entering into a nuptial agreement requires an exchange of financial disclosure, which inevitably opens up a dialogue in respect of finances. This helps couples to better plan for their future and encourages conversations in relation to defining and achieving short and long-term financial goals as a couple. This can help to avoid frustrating situations at a later stage where couples are on different pages with regards to their financial habits and expectations.
Nuptial agreements will clearly outline both parties’ financial position at the time of the marriage or civil partnership and can ringfence the assets that were brought into the relationship. This is particularly helpful at the current time when couples are, on the whole, getting married later than previous generations and once they have established their careers and built up their own assets. The legal presumption that all assets of a marriage or civil partnership should be divided equally no longer reflects the reality of modern relationships.
What should and should not be included in a nuptial agreement?
Nuptial agreement are all different and are drafted to meet the couples’ requirements.
However, each agreement will include a schedule of the parties’ assets and liabilities and confirmation of assets they wish to be treated as joint property and those that they wish to separate. This helps to minimise conflict in the event of a relationship breakdown as parties have agreed what is appropriate in advance.
Nuptial agreements routinely include details of:
- Property held in sole or joint names;
- The balance of all bank accounts parties hold an interest in;
- Premium bonds;
- Stocks and shares;
- Pension valuations;
- Incomes;
- Business interests; and
- Inheritance.
Topics that cannot be included in a nuptial agreement include:
- Child arrangements and decisions in relation to a child’s upbringing such as their schooling and any medical treatment;
- Matters relating to the amount of maintenance that either parent will pay towards the upkeep and support of any children;
- Matters that are illegal in nature;
- Matters which refer to the lifestyle of either party; and
- Matters that are strictly personal in nature and fall outside the financial remit of a nuptial agreement.
What should I be aware of when entering into a nuptial agreement?
Under the current law, nuptial agreements are not automatically legally binding. This is being re- considered by the Law Commission and advice is due to be published shortly setting out their updated recommendations and any suggestions for future law reform. Even so, under the current legal framework, if a nuptial agreement is properly formed and meets the needs of both parties and any children of the family, the Court will place weight on it.
If you are considering entering into a nuptial agreement, it’s important that you receive early legal advice from a specialist family solicitor. The team at Grant Saw are experienced in dealing with nuptial agreements and wealth protection and offer no obligation initial consultations remotely and in person. If you have any questions or would like to arrange a consultation with a member of our team, please feel free to email me or contact the team on 020 8858 6971.