Prenuptial Agreements are prepared prior to a marriage as a way of protecting both parties by allowing the couple to mutually agree from the outset how their assets will be divided following a relationship breakdown. Prenuptial Agreements, whilst being acknowledged by the courts, aren’t legally binding documents… but this could be set to change in 2013.
Prenuptial Agreements have traditionally been used to protect the financial assets of the man, but they are now starting to have more significant impact on 21st Century women. These days there are far more strong female role models in positions of power both in the business and entertainment world, inspiring a new generation of women to build successful careers of their own.
Modern women now earn just as much, if not more than men, so it is becoming increasingly common that women are using Prenuptial Agreements to protect their finances when entering into a marriage.
42% of marriages end in divorce and many of those individuals later choose to marry again. It’s not surprising that we’re experiencing an increase in people seeking divorce advice and wanting to regulate what should happen to their finances or assets in the event of a marriage break down. Often it’s those heading into second marriages who want to preserve assets they may have fought long and hard to keep in their first divorce settlement. In these circumstances, it is becoming increasingly common that parents suggest having a Prenuptial Agreement prepared. If they have helped their son or daughter to get onto the property ladder by re-mortgaging their own home to provide a deposit, they want to make sure their gift remains with the person who they intended to benefit.
The current status of Prenuptial Agreements is that they’re not legally binding in England and Wales but they are one of the factors the court will consider within a divorce petition. Increasing weight has been attached to the existence of a Prenup in recent years, particularly when the parties have each had independent legal representation from family solicitors, have provided each other with accurate information about their respective financial positions and where the agreement has been signed in good time before the wedding (ideally at least 21 days).
The current law is uncertain and the court has a wide “discretion” to adjust ownership of assets in order to produce “fairness”. But who is to say what is fair? There is no formula and no certainty for those heading into a divorce. It’s hardly surprising then this rather unromantic topic is being added to the wedding list of many future brides and grooms.
The Law Commission has recommended that Prenups be given proper legal status and their full recommendations are expected later this year. At the same time they will be making formal recommendations about how the courts should approach the question of “non-matrimonial” assets and the parties “needs” on marriage breakdown.