What is a pre-nup?

Hannah BuddPartner, Keystone Law

The Daily Mail reported last month that Prince Harry has rejected the idea of signing a pre-nup (pre-nuptial agreement) ahead of his forthcoming marriage to Megan Markle on 19 May 2018.

In this blog I set out a little more detail about what pre-nups are; their status in law and how they might be used by people in order to protect their assets. In Harry’s case, his assets are estimated to be in the region of £30 million.

What is a prenup?

A pre-nuptial agreement is an agreement entered into between the parties before their marriage. The agreement is intended to regulate the financial arrangements in the event of their subsequent separation or divorce. Similar agreements can be entered into after the marriage and are known as post-nups (post-nuptial agreements).

Neither party to the pre-nuptial agreement agreement is under an obligation to sign it. Such agreements anticipate that one party will agree to potentially limit claims that they might otherwise have against the other in the event of their separation or divorce.

Are prenups binding?

As yet present statute law does not hold pre-nuptial agreements as binding. However, courts are placing considerable weight on such agreements.

The leading case on this issue is that of Radmacher v Granatino which was heard in the Supreme Court in 2010 in which the principle was established that:

“The court should give full effect to a nuptial agreement freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”

What do they involve?

The terms of the pre-nuptial agreement will depend entirely on the individual circumstances of the case but it is good practice for the agreement to meet the following criteria:

  • The parties should receive disclosure from the other about their financial situation;
  • The parties should both receive separate legal advice at the time the agreement was entered into and the legal advisors should sign a statement to confirm this.
  • The agreement should be entered into at least 28 days before the marriage.
  • The agreement should contain a statement signed by both parties confirming that they understand that signing the agreement will remove the courts ability to make financial orders.
  • The agreement should be made by deed.

Are prenups just for celebrities and wealthy people?

It is important that very careful and detailed legal advice is provided. For that reason in some circumstances the cost of preparing and entering into a pre-nuptial agreement can be prohibitive.

However, pre-nuptial agreements can offer particular value in some circumstances. These include where one party is coming to the marriage with significant assets that they had acquired prior to meeting their spouse or alternatively where the parties have children from previous relationships and wish to ensure that their assets are protected to enable them to pass to their children.

If you would like further information about prenup and postnuptial agreements please contact Hannah Budd on + 44 203 405 8395 or by clicking here.