Family Law Insights: Is a prenup right for me?

John Randle, Head of Family Practice

John is a specialist family solicitor with over 40 years’ experience dealing with complex, high value divorce cases.

A pre-nuptial agreement is used to show the courts what you intended to happen to your assets in the event of divorce. A prenup is commonly used where one party wishes to protect the assets they are bringing into a marriage. However, prenups can also be useful if one party has substantial debts or is at risk of incurring substantial debts and wishes to protect the other party from liability.

The cost of drafting a prenup varies with the complexity of the parties’ assets and circumstances but is typically in the range of £4,000 to £12,000 (plus VAT and expenses). However, a robust prenup can potentially save hundreds of thousands of pounds in legal expenses and court fees while also protecting the assets of one or both parties.

In general, prenups are worth considering in any of the following situations:

• Where there is a significant disparity between the parties’ assets prior to marriage. A prenup will allow you to specify which assets are ‘matrimonial property’ to be divided in the event of divorce and which assets will remain with their original owner.
• Where one or both parties own a limited liability company. A prenup can help protect business assets, including shares in the company, ensuring the business remains viable in the event of divorce.
• Where one or both parties owns property or has assets in another jurisdiction.
• Where one or both parties has children from a previous relationship and wishes to protect their inheritance.

It is important to note that a prenup cannot oust jurisdiction, and in England and Wales they cannot oust any decision made by the courts. However, although prenups are not legally binding, courts are likely to rule in favour of any agreement that meets the following criteria:

• The agreement continues to reflect the couple’s original financial circumstances. A significant change in one or both parties’ financial position or the arrival of children may make the terms of the prenup unenforceable if the court considers the terms unfair.
• Both parties made a full and frank financial disclosure before signing any agreement, and no assets or liabilities were concealed by either party.
• If neither party was subjected to undue influence or duress by the other.
• The agreement was signed at least 28 days before the couple entered marriage or civil partnership.
• Both parties entered into the agreement freely and fairly, and with knowledge of its consequences for their rights and entitlements in the event of divorce or dissolution.

As the above may indicate, it is very difficult to draft a robust prenup without first taking professional legal advice, and courts will generally expect both parties to have consulted a solicitor before signing their prenup. At the very least, it may be more difficult for either party to challenge the validity of an agreement that was drafted by a skilled solicitor.