What is a pre-nuptial agreement?
A pre-nuptial agreement is an agreement between two people, who are planning to enter into a marriage or civil partnership, which sets out their intentions with regard to assets, should the marriage or civil partnership come to an end.
How are pre-nuptial agreements reached?
Before entering into a pre-nuptial agreement, it is important that both parties have a complete understanding of the other person’s financial circumstances. In order to ensure this is the case, parties are advised to enter into a disclosure process, whereby they set out in detail all of their assets and liabilities. Often this disclosure is supported by documentary evidence. Once both parties have a clear picture of what the assets are, the terms of the agreement will be a matter of negotiation between them and/or their respective lawyers. Parties can reach a pre-nuptial agreement using mediation or other forms of alternative dispute resolution, but more often than not, both parties will instruct their own lawyers to represent them in negotiations.
What can a pre-nuptial agreement deal with?
A pre-nuptial agreement can deal with everything which would need to be considered should a relationship breakdown. For example, it can deal with what should happen to the family home, how any inherited assets or assets owned before the relationship should be dealt with, what should happen to the parties’ pensions, the list is vast. How wide ranging and comprehensive a pre-nuptial agreement is, largely depends on the parties and the level of detail they wish to include. It is not always possible to foresee every conceivable change in future circumstances, but common occurrences, such as the birth of children, should be accounted for within the terms of the agreement.
Is a pre-nuptial agreement legally binding?
A pre-nuptial agreement is not strictly binding on the courts when a relationship breaks down. However, if it can be shown that were the pre-nuptial agreement to be implemented this would not be unfair to either party, the court is likely to place great weight on the agreement. Parties can improve their chances of having an agreement upheld by ensuring the following:
- Both parties have given and received full and frank financial disclosure;
- Both parties have taken, or at least had an opportunity to take, independent legal advice as to the terms of the agreement and the consequences for them;
- The agreement was not reached and finalised in the final days and hours leading up to the wedding. In these circumstances, one party may allege that they were forced to sign the agreement on threat of the wedding being cancelled.
- The agreement is as comprehensive as possible and deals with or allows for possible changes in circumstances, such as the birth of children.
Whilst ensuring all of these things does not guarantee that an agreement will be upheld by the court, the chances are greatly improved.
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