What is A Prenup Agreement | Eatons Solicitors

In England and Wales, prenup agreements are becoming increasingly popular. According to a survey carried out on behalf of Co-op legal services, 21% of marriages now begin with the signature of prenuptial agreement. So, what is a prenup?

A prenuptial agreement also known as a prenup, is a written contract signed by a couple about to enter marriage or a civil partnership. The contract establishes how the couple’s assets owned before and during the marriage or civil partnership are divided in the event of a divorce or separation. In this blog, we will look at what a prenup does and explain what a postnuptial agreement this as well as looking at whether it is legally binding in the eyes of English and Welsh family courts.

What does a prenup do?

A prenup determines how a couple’s assets are divided following a divorce or separation.

Therefore, it fulfils some very specific functions ranging from financial arrangements to protection of assets. As such, the contract is first and foremost of a financial nature because it is designed to protect the assets or wealth of the member of the couple who would be disproportionally affected during the divorce or separation proceedings. For example, the prenup may protect the partner against debt, allow them to keep their savings, or determine what happens to the family business in case of a divorce.

However, despite its financial nature, a prenup can protect more than money or assets. It can for example also be used if one of the couple’s partners is a business owner. In this case, the prenup can be used to protect the business’s future as well as its employees who would be at risk of losing their jobs should the couple separate or divorce. If you are in such a position and would like advice, the team of family solicitors at Eatons Solicitors can help you with create a prenuptial with which you and your partner will be happy.

Is a Postnuptial agreement different to a Prenuptial agreement?

A Postnuptial agreement has similar implications to a prenup but it is an agreement that is entered after a couple got married without a prenup. The purpose of a postnup contract is to demonstrate that the couple’s partners intentions are the same even though changes in their situation may have occurred. The contents of the agreement is generally the same as that of a prenup. Both these types of agreement are frequently used by couples who are marrying for a second time so they can preserve assets for children of a previous marriage.

Is a prenup legal and binding in England and Wales

In England and Wales, a prenuptial agreement is not legally binding which means the agreement cannot be enforced by a family court. The court will take the position that both partners knew what they were doing when they chose to enter the prenup agreement and in doing so understand the financial or material consequences of their separation or dissolution of their marriage. The only reason a judge would consider not upholding a prenup is if it placed one of the partners in a position of hardship. This means the family court judge will consider upholding a prenup even if it might go against what they might have otherwise decided.

But, before a divorce case in which a prenup is involved goes to court, the couple whose marriage is breaking down must consider the following:

Disclose everything: This allows the couple to get a better understanding of the assets, financial resources, and liabilities involved in the separation or divorce. It almost means that neither party can place undue pressure on the other.
Consider “what if questions”: When a couple that has signed a prenuptial agreement decides to separate, they must consider what if questions such as: “Is the separation permanent?”, “What happens if the couple gets back together?", and “What are the living arrangements following the separation?”.
How does a prenup fit-in with a no-fault divorce: Introduced in April 2022, the no-fault divorce allows couples to dissolve their marriage without having to place the blame onto one of the partners, which makes the procedure a lot quicker. If a couple has a prenup, they can still go ahead and start a no-fault divorce procedure, and as would be the case for a couple without a prenuptial agreement, the couple must have tried everything including mediation before taking their case to a family court. However, such an agreement may speed up the process a little bit because it predetermines how the assets and finances are divided. It is worth bearing in mind that if the couple has children the family court judge will always consider how the prenuptial agreement impacts the children’s interest and will rule in their best interests in any financial settlement.

Using a prenuptial agreement isn’t always straightforward and legal advice is often required, that is why we advise you download our PDF about family law so you can make a more informed decision.

Radmacher v Granatino (2010): What did we learn from this case about prenuptial agreements in England and Wales

Some of the key learnings to take from the case are still relevant today such as prenups can be enforced if both entered the agreement willingly and understood what they were agreeing to.

We can also mention that the England and Wales Law Commission once proposed an idea such as ‘qualifying nuptial agreements’ to make prenups binding if they met specific conditions - however it’s yet to be legislated as of 2024.

The Rising Popularity of Prenuptial Agreements in England and Wales since Radmacher v Granatino (2010)

What are the facts?

When French investment banker, Mr Granatino, married a very wealthy German national, Miss Radmacher, the wife’s family insisted they sign an anti-nuptial agreement stipulating they forego any interest or benefits from property acquired either before or after the marriage. The couple had been married for 9 years and had 2 children after which the husband claimed ancillary relief against his wife’s assets.

What were the Issues raised?

The husband had sought legal advice because he claimed he was not legally bound by the terms of the agreement due to the fact he was not as wealthy as his wife. In doing so, he argues that the anti-nuptial agreement was contrary to public policy under MacLeod v MacLeod [2010] 1 AC 298 because the financially weaker partner is unavoidably under pressure to sign the contract.

However, the wife argued that at the time the divorce took place, there was no legislation in place prohibiting both her and her husband from entering the agreement. This meant that her husband signed the agreement of his free-will and should be bound by it.

Decision

The judge ruled that the anti-nuptial agreement was valid and that the rule that such agreements were contrary to public policy should not apply. This meant the court could give effect to a prenuptial agreement event if the outcome of applying it would be contrary to how it would have ruled.

Does a prenup mean you get money?

One of the most common misconceptions surrounding prenuptial agreements is that there is potential to make financial gain. This is definitely not true since the purpose of such a contract is more specific to divorce arrangements such as married earnings. In fact, the main purpose of a prenup agreement is to determine how the couple’s assets and finances acquired either before or during the marriage are split. This means there are cases in which one of the partners can be at a disadvantage since there isn’t any legislation preventing the family from overruling the prenuptial agreement even it goes against how they would normally have ruled.

What should be included in a prenuptial agreement?

Even though there aren’t any rules forcing a judge to enforce a prenuptial agreement, there are some essential the contract must cover.

These include:

The identification of the parties involved, this determines who is entering the agreement and stipulates they are doing so willfully.
A disclosure of both partners assets and liabilities including but not limited to properties, bank accounts, investments, and debts.
How property and assets acquired before and during the marriage will be split up in the case of a divorce. In this section it would be appropriate to clarify what is considered separate property and marital property.
The agreement must mention spousal support so that it is made clear whether one of the parties will provide financial support; including a set amount and duration.
Guidelines for the management of joint bank, credit, and investments. This also determines how the financial assets are split following a divorce.
If one of the partners is a business owner, the agreement should stipulate how business interests owned before the marriage are protected or make provisions for how the business will be valued and divided if the business was created during the marriage.

What cannot be included in a prenup in England and Wales?

Whilst there are things a prenup must include there are also things that cannot be included in a prenuptial agreement. If those elements were included, they would nullify the contract.

These are:

Child support and child arrangements: These matters are always made at the discretion of the court with the child’s best interest in mind. Therefore, a prenup cannot mention anything in relation to child support and child custody.
Lifestyle Clauses: There are no circumstances under which a prenuptial agreement can determine non-financial aspects of the relationships. It can’t for example, determine who is responsible for household chores.
Matters that go against Public Policy: Any terms that are deemed unfair or against the public interest cannot be included. This means the prenup cannot contain a clause that encourages divorce, impose penalties in case of infidelity or anything else that might otherwise undermine the integrity of the marriage.
Unfair or Unreasonable Provisions: Under no circumstances can a prenuptial agreement contain any clauses that would stipulate one of the partners would be left without adequate support. In any case, the courts will assess the fairness of the agreement prior to delivering their ruling.
Future non-financial agreements: As with lifestyle choices, a prenup cannot dictate personal preferences or anything else that isn’t relevant to the couples’ assets or finances.
Waivers of Legal Rights: The prenup shouldn’t restrict either party from accessing a legal recourse or from modifying the agreement in the future.

Children Arrangements

Even though in England and Wales, a prenuptial agreement cannot include clauses regarding child support and child arrangements, time to make children arrangements must be given between the end of the marriage and enforcing the agreement. This is to avoid duress and ensure questions surrounding inheritance (it is possible to stipulate how the inheritance is split in a prenup), division of property and living arrangements are fully resolved.

This is because even though a prenup is not legally binding, the judge presiding over the case can use it an advisory document to determine what is the child’s best interest should the divorce go to court.

What are the Pros and Cons of a Prenuptial Agreement in England and Wales?

Pros

Even though in England and Wales, prenuptial agreements aren’t legally binding, there are some advantages in having such a contract in place for both of the couple’s partners.

It may sound obvious, but one of the advantages is asset protection as a prenup guarantees that personal and family assets are protected including inheritance and businesses. Moreover, this type of contract guarantees clarity and certainty in terms of dividing assets, therefore, avoiding potential disputes if a divorce is to take place.

Another consideration is that having a prenup in place can open up honest discussions about finances and future financial plans because the purpose of the agreement is generally to protect assets acquired before and during the marriage.

Cons

Despite presenting many advantages, there are of course a few disadvantages to prenuptial contracts. These include, a perceived lack of trust in the longevity of the marriage because such can imply the marriage is not forever, a potential for unfairness particularly if the agreement is drafted in favour of the wealthier party, and as a result would impact on the relationship dynamics because it introduces a transactional element to the marriage.

Aside from these considerations, another disadvantage of having a prenuptial agreement in place is that such a document is not legally binding, and the court has the discretion to either modify or set aside the document if it is deemed unfair.

Are you safe with a prenup? Weighing the pros and cons of prenups in England and Wales

Despite presenting many pros and cons, prenuptial agreements still present some value for a couple looking to engage in marriage or a long-term committed relationship. That is why Eatons solicitors commits itself to provide clear and honest advice to couples so they can make an informed decision about whether having a prenup is the best for them or not.

How much does a prenup cost in England and Wales?

The cost of a prenup in England and Wales can vary significantly depending on several factors, including the complexity of the agreement, the assets involved, and the solicitors' fees. Thiis means we can only give you a basic overview of how much the agreement might cost.

As a rule, though, prices range from £500 for a basic prenup to well over £5,000 for more complex agreements. The price is dependent on how complicated the agreement is and what assets the contract covers without considering other additional costs such as solicitor’s fees, consultations, and the fact that both partners will need their own legal advice to ensure the agreement is fair.

Navigating through a prenuptial agreement is confusing, so that is why Eatons Solicitors always provides its clients with clear estimates.

Prenups in England and Wales: What Is It, Pros and Cons, Cost and More