October 20, 2024
Family Law Partner Denise Head explores the status of prenups in UK law and why savvy couples are now more likely to consult her as part of their other wedding preparations.
Let’s be clear. Planning to fail is not romantic but there is a growing realism in our society where we cover ourselves for unexpected future outcomes. We are required to have car insurance; we don’t plan to have an accident. We don’t like to consider our own deaths but recognise that making a will is the best way of ensuring our final wishes are carried out.
A prenuptial (prenup) or premarital agreement is one made by couples before entering into marriage or a civil partnership, setting out how assets should be split in the event of a break-up. They are not automatically enforceable in the UK but since 2010 and a case in the Supreme Court involving a German heiress, courts will take them into account provided both parties have taken independent legal advice and have entered into the contract in good faith.
Reading this you will be thinking that such a concept is only for the rich and famous and not for the likes of us. However, you may be surprised. Here are some of the scenarios which has led to couples considering a prenup:
- Parental help in buying a first home: property prices continue to soar and getting on the first step of the ladder increasingly requires a little help from the “bank of mum and dad”. The couple in question might be still be viewing marriage through rose-tinted specs but you can be sure their parents are more pragmatic. If a chunk of money is to be provided to build the nest, the loving parent will want to make sure that the investment is ring-fenced and still owned by their child and not the “in-law” in the event of a split. Although a parent with such a view cannot force their child to have a prenup, they can always change their mind in terms of the generous loan or gift!
- Marrying later in life: less people are marrying young and so when you are talking about couples in the 30s, one or possibly both parties may have accrued significant assets such as a house or a business. There is recognition that these assets have been developed and acquired pre-marriage and a natural leaning towards wanting to protect what is considered an individual’s rather than the couples’ property. These “millennials” have grown up experiencing divorce between people close to them in a way significantly less common than those of their parents’ or grandparents’ generations. There is also a greater degree of financial parity with more women working and a significant proportion earning more than men. These couples tend to be more practical and choose to maintain a separate financial identity whilst protecting shared future family assets which can be reflected in a prenup.
- Second families: if you have already been through a divorce, your experience may make you more open to the idea of a prenup. This is particularly the case for those with children from previous relationships who will be motivated to consider securing their children’s interests as well as their own in the event of a divorce.
- Family businesses: it makes commercial sense to prevent assets being split in divorce, leaving business potentially vulnerable. If the shares in a business are a couple’s key asset, divorce could mean not just the end of a marriage but also the business.
If we can help you with you consider whether a prenup or indeed a postnup (made retrospectively after marriage) is for you, contact me at denise.head@bates-wells.co.uk.