With this prenup, I thee wed. It may not be the most romantic of sentences, but more of us than ever are considering prenuptial agreements to protect our assets before getting married.
New research from financial advice service Unbiased.co.uk reveals that solicitors predict a sharp increase over the next five years in the number of people who plan to draw up prenups before getting married. Despite being unenforceable in law, four out of five solicitors questioned by Unbiased say that a prenuptial agreement can be an effective way of protecting your assets in a divorce proceeding.
“High-profile celebrity divorce cases havey raised the importance of prenups as a safety net on an individual’s wealth, resulting in an increase in people taking them out before they tie the knot,” says Karen Barrett, the chief executive of Unbiased.
A prenup is a contract which typically stipulates how property and other assets would be divided should the marriage end. A well-drafted arrangement limits the risk of claims to individual assets and, although they cannot protect anyone entirely, they do have influence in the divorce courts and may be upheld at the judge’s discretion. In a recent Court of Appeal case, a prenup was fully upheld and Katrin Radmacher, a 39-year-old German heiress, avoided a £5m payout to her former husband, Nicolas Granatino. Many solicitors argue that cases such as this show that prenups will only increase in effectiveness.
Critics argue that the nature of such an agreement starts a relationship off on the wrong foot, but the truth is that divorce statistics make sobering reading. Around 45 per cent of newly married couples end up divorced, with almost one in eight marriages ending before the fifth anniversary, according to the Office for National Statistics. Although prenups are by no means standard practice, they are increasing in popularity; many people anticipate a change in law with the Conservatives announcing they want to make them enforceable.
The first thing to do is take legal advice, as signing one without this can be enough for a judge to declare it invalid. Both parties need separate legal representation to prove that neither has entered the agreement under duress. Prenups don’t come cheap and fees can vary widely depending on the complexity and time of the case. The cost of even a basic agreement will be about £1,000 but should pay for itself if the worst happens.
“In comparison with the fees that would be incurred in a litigious court battle, there is bound to be a saving,” says Rachel Spencer Robb, associate at Clarion Solicitors. “There is no ‘cheap way’ as specialist family lawyers should be used to ensure that the agreement is drafted properly and therefore not vulnerable to being set aside.”
With this is mind, be aware of what will invalidate a prenuptial contract. Firstly, a prenup should be made at least 21 days before the wedding to show that the decision isn’t forced or rushed. A solicitor for each party can draw up the legal documents to demonstrate to a court that both sought independent advice. Both parties must disclose their financial situation openly and an independent financial adviser may also be required if the assets are complicated.
“They are complex documents if drafted properly and may have tax, trust and inheritance implications where further advice will be needed. They don’t have to be particularly long but must be precise,” says Shelley Hesford from law firm sas daniels.
Prenups should also be reviewed if circumstances change, such as illness, unemployment or the birth of a child. Amending a prenup after the wedding day may actually strengthen the validity of the arrangement.Reuse content