Before You Say “I Do”, think, Can A Prenup Shape My Financial Future?

It can be awkward to raise a pre-nuptial agreement when you are planning a wedding. Many couples worry that it will feel unromantic, or, that it says something negative about the relationship.

In reality, a prenup can be a sensible way of having an open conversation about money before marriage. It may be particularly relevant where one person owns a home, has a business, expects an inheritance, has children from a previous relationship, or brings significantly more wealth into the marriage.

A prenup will not remove the court’s power to decide what is fair if a couple divorces. It can, though, make a real difference. A recent Family Court case shows just how much difference it can make when an agreement has been properly considered before the wedding.

The recent court decision

In a recent court decision, the court considered a couple’s pre-nuptial agreement during financial remedy proceedings following divorce.

The couple had been together for some time before marrying and had two children. Before the wedding, they signed a pre-nuptial agreement. Both had legal advice, and financial information had been exchanged.

By the time of the divorce, the husband had substantial property, shareholdings and investment interests. The total assets considered by the court were worth more than £26 million, although a significant proportion was tied up in interests that could not simply be sold or converted into cash.

The agreement was not perfectly drafted. The judge said so. There were parts that could have been clearer, and the parties disagreed about how some of the provisions applied. That did not mean the agreement was worthless. The court was able to decide what it was intended to achieve and gave it substantial weight.

The agreement was intended to protect a number of assets held by the husband, including property acquired before the marriage and assets held solely in his name.

It also dealt differently with jointly owned assets. The family home was to be shared, but with arrangements allowing the wife and children to remain there for a period. The court also had to decide how the agreement applied to particular investment-related interests.

The overall outcome was not equal. The husband retained most of the assets, including interests that the agreement was intended to keep outside a sharing claim.

That was not, by itself, enough to make the agreement unfair.

People are generally free to make financial arrangements before marriage. A couple may agree that a business, inherited wealth, a property owned before the marriage, or other family assets should remain separate. If both understand what they are agreeing to and the agreement remains fair, the court may give effect to that choice.

But a prenup is not the whole answer.  

The court must still consider financial needs.

In this case, the judge considered the wife’s future position and assessed what she would reasonably need to live on. The court awarded a further £1 million in capitalised maintenance, together with child-related provision and other agreed financial arrangements.

That is the part of the decision many people overlook. A prenup may protect assets from being shared equally, but it will not necessarily prevent a court from making provision for a spouse or children where it is needed.

The position will depend on the facts. A short marriage with no children may look very different from a long relationship where one person has stepped back from work to care for a family. Housing needs, income, health, childcare responsibilities and future earning capacity will all matter.

So, will a prenup be upheld?

There is no simple yes-or-no answer. A court will look carefully at how the agreement came about and what its effect would be when the marriage ends.

The starting point comes from the Supreme Court case of Radmacher v Granatino. In broad terms, a court is more likely to respect a prenuptial agreement where each person entered into it freely, understood what it meant and it would not be unfair to hold them to it.

The following can make a real difference:

• Both people having their own solicitor.
• Open financial disclosure before the agreement is signed.
• Giving each person enough time to consider the document.
• Avoiding pressure in the final days before a wedding.
• Making sure the agreement is clear about property, savings, business interests and other important assets.
• Thinking realistically about what would happen if there are children or one person takes time out of work.
• Reviewing the agreement if circumstances change significantly.

A prenup should not be treated as a document designed to “win” a future divorce. It is more useful when it records a fair and realistic plan that both people understand.

Why early advice matters?

The earlier a couple takes advice, the more options they usually have.

It gives time to discuss the agreement properly, exchange financial information and make changes where needed. It also avoids the pressure that can arise when a document is introduced shortly before the wedding.

In some situations, a post-nuptial agreement may be more suitable. This is an agreement made after marriage. It can be useful where no prenup was signed before the wedding, or where an existing agreement needs to reflect a new business, inheritance, house purchase, child or other major change.

How Whiterose Blackmans Solicitors can help?

At Whiterose Blackmans Solicitors, we advise clients on pre-nuptial agreements, post-nuptial agreements, divorce and financial settlements.

We understand that these conversations can be sensitive. Our role is to explain the options clearly, help you understand the potential consequences, and ensure that any agreement is approached carefully and fairly.

If you are thinking about a prenup, have been asked to sign one, or need advice about an existing agreement following separation, our Family Law team can help.