What are Prenuptial Agreements?
A Prenuptial Agreement (PNA) is a contract entered into by two individuals before they marry. The agreement sets out the parties’ wishes regarding how they would like to split their assets if their marriage should end in divorce. PNAs are becoming increasingly popular today because Courts are now tending to uphold them in most circumstances.
Why enter into a PNA?
If you have substantial assets, complex personal or financial circumstances, or you are a high earner, you should consider the consequences of a possible relationship breakdown. It could have both a commercial and practical impact on your future.
A PNA is particularly useful for those wishing to protect wealth that they have built up before the marriage. If, for example, you are fortunate enough to have forged a successful career which has enabled you to become particularly wealthy, or otherwise have substantial wealth which you would like to protect from the implications of divorce, entering into a PNA is certainly worth considering.
A PNA could also help you to protect wealth for your children from a previous relationship, or assets that you have inherited from a family member.
How enforceable are they?
Although a Judge is not obliged to enforce a PNA, s/he will consider such an agreement when deciding what type of financial order to make. PNAs serve as an indication to a Judge of what the couple intended when they entered into the marriage.
How do I ensure that a PNA is valid?
It is essential that you and your partner obtain independent legal advice prior to entering into any agreement. You should both be fully aware of the implications of the agreement at the time of signing it, and you must both enter into the agreement freely and without any duress or undue pressure.
You must each give full financial disclosure regarding both your assets and income so that you are both aware of each other’s financial position prior to entering into the agreement.
The agreement should also be realistic and fair. If the PNA does not provide sufficient financial provision for either of you, the Court is unlikely to follow the agreement if doing so would leave one party destitute. The Court is also less likely to enforce an agreement that is too heavily weighted in favour of one party or an agreement that does not recognise the contribution of one party having taken care of the family, allowing the other to accumulate wealth by pursuing a career.
When does a PNA need to be signed?
A PNA should be executed at least 21 days before the date you intend to get married.
Does a PNA need to be updated in the future?
Should your circumstances change - for example, if you have a child or if your income is significantly reduced - you should revisit your PNA to ensure that it remains valid. It should reviewed on a regular basis anyway, to ensure that it is continues to reflect your wishes.