13th Mar 2019

Prenuptial agreements: What do I need to think about?

By Pamela Collis

In this blog Family Law in Partnership senior consultant, Pamela Collis, considers the factors you may want to bear in mind before entering into a prenuptial or post nuptial agreement.

Of course when we marry, we expect our relationships to be life-long but we also know that many marriages don’t last so long. The courts ignored marital agreements (otherwise known as prenuptial and post nuptial agreements) for many years but now are likely to adopt them unless they are unfair. So a pre-nup can make a marriage more secure but whilst they may have moved centre-stage in our courts, most of us have yet to feel culturally comfortable about them. For most of us avoiding the difficult conversation about money before a marriage and jumping in seems like the easier option. But attitudes towards prenuptial agreements are changing, particularly given the rise of financial support provided by the “Bank of Mum and Dad”.

American research involving 4,500 couples suggested that the strongest predictor of divorce was a couple that argues over money. Conversely, those who have or develop the skills to have those hard conversations, possibly leading to prenups, are most likely to give their future the firmest foundations. In the best traditions of elocution, here are some vowels aimed at making the whole process a little easier.

A is for attitude and advice

It is hardly surprising that we seek to avoid the discussions where we think that we can only commence them fearful that we will seem mean or grasping or that the romance of marriage will be undermined. Think of the discussions around a prenup as being about respect for what matters to you both and approach the conversation with authentic curiosity and you should not go far wrong. It is for your legal advisers to then help you sift through the options to identify the approach that will work best.

Legal advice is unavoidable if you are seeking to create a structure that will be respected by the courts: parties are unlikely to be held to a prenuptial agreement where they are unable to show sufficient understanding not only of the terms of the prenuptial agreement but also its consequences. In Family Law in Partnership director Bradley Williams’ case of B v S (marital property regime) the court did not hold the parties to the terms of the default separate property regime in Barcelona (which had a similar effect to a prenuptial agreement) because at the time of the marriage, the wife did not have the necessary understanding of what its consequences might be in the event of a divorce in England. When thinking about a prenuptial agreement, try to find a lawyer with whom you feel comfortable and who has done alot of this work (they will have the systems in place to get you through it a whole lot quicker). It will help where they have also worked with the lawyer appointed by your fiancé(e), making things move faster within a more efficient working relationship. Most lawyers will give you a list of those lawyers they think are best in class for your fiancé(e) to consider.

E is for Early

Start early. The courts are less likely to pay attention to prenuptial agreements entered into within 28 days of the marriage, for fear that one of the parties was feeling coerced or pushed into signing the prenuptial agreement. But more importantly, the discussions are likely to feel rushed and feelings are more likely to be trampled on.

I is for international, integrated & investment advice

International couples add a layer of complexity to an already challenging structure: if any subsequent divorce proceedings could be started abroad (eg. because of residence there or nationality) then the prenuptial agreement will also need approval from a foreign lawyer qualified in that jurisdiction. Another reason to start early. At Family Law in Partnership we have a network of lawyers in other jurisdictions who we can put you in touch with if needed.

Integrated refers to the fact that “pre-nups” are part of an overall structure that will include wills, probably trusts, how you set up your banking arrangements and the insurances that you take out and perhaps how you will manage your day to day finances. Wealth management and investment advice will also be crucial. This is particularly so given that most prenuptial agreements follow a 3-fold structure:

  • Ring-fence: Here, you make clear what is “out”, to be retained by each of you … usually what has been acquired before the marriage and often what is anticipated as inheritance.
  • Common endeavour: marriage is a financial partnership as well: it would be unusual to have completely separate finances throughout the relationship.  Usually there is a home or homes to be acquired and joint earnings to be managed to provide for future joint needs and security. This is the key role for the investment adviser: having investment advice, understood (and ideally acted on and managed) by both of you to ensure the safe accumulation of assets is crucial.
  • Safety net: this, the third element, is usually the complicated piece: seeking to identify what might be needed from the ring-fenced resources by the less-financially-strong party in the event of separation in different circumstances. The courts will always look to depart from the terms of the prenuptial agreement if it fails to provide for the needs of children but also struggle where the needs of the parent are not met at a basic level at least. “Needs” is an elastic concept and one that may be difficult to reduce to a formula to cover all the eventualities of life. The further that your prenuptial agreement departs from what is ordinary in the court’s eyes, the greater the risk that it may not be upheld (resulting in the court case that you were striving to avoid).

O is for ordinary and obvious:

Make your prenuptial agreement relatively straight forward … try to pin down every possible nuance that may take place and there is a strong risk that you will still be negotiating as your wedding day goes past (as well as spending an inordinate amount on the project and probably not getting to the end of it anyway).

U is for Understanding

First of course it is crucial that you understand the prenuptial agreement you enter into so that you can continue to make financial decisions during the marriage in a way that will leave you each protected; but beyond this, clarifying motivations can be key to whether the prenuptial agreement’s approach will be adopted by the court. What at first sight may appear unfair can be readily understood when one has context.

Post nuptial agreements: And for those who have already taken the “jump in and hope for the best” approach, there may come a time when taking a careful look at your finances again makes sense. The hardest part here is likely to be getting started: you did not have one yesterday and you haven’t got one today – it is all too easy to put it off for a whole sequence of tomorrows until you come to regret that you did not get around to it.

For further information on prenuptial and post nuptial agreements, visit our dedicated website page or speak to any of our talented team of specialist family and divorce lawyers. As a firm we have extensive experience of advising on prenuptial and post nuptial agreements of all types including for international clients.

Pamela Collis is a consultant at Family Law in Partnership. She is a very senior and highly regarded family lawyer having specialised in family law for over 35 years. Pamela is known for her pragmatic and constructive style and her strategic vision. Pamela’s primary focus is international and domestic family law matters particularly the financial aspects of relationship breakdown, private law children matters (including surrogacy and international relocation) and pre and post nuptial agreements. Pamela regularly deals with jurisdiction issues, cross border tax issues and cases involving complex business valuations. Contact Pamela at E: pc@flip.co.uk or T: 020 7420 5000.