What is a prenup? And what will a prenup cost? These are questions which clients frequently ask me. Whilst there are some online services that purport to offer a low cost prenup, these are often standard forms or templates that end up being quite unsuitable for the couple’s needs. Then comes the real cost – a poorly drafted prenup which doesn’t offer the protection it was intended to, leaving it vulnerable to challenge through the Courts. So what should you think about when considering a pre-nup in 2014?
Prenuptial agreements are agreements entered into before a couple get married. They have gained in popularity over the years, and are widely known.
Prenuptial agreements have been given increasing weight by the courts over recent years. They are therefore extremely worthwhile documents to have and you should not enter into one unless you intend to be bound by the contents. That said, the Courts do have the power to depart from the agreements in certain circumstances, and it follows that they are not automatically binding or beyond the reach of the Court. It is important that they are entered into without undue influence, pressure or duress by or on either party and that each party has had independent legal advice or, at the very least, been given the opportunity to take independent legal advice. I would therefore strongly suggest that anyone thinking of entering into a prenuptial agreement takes independent legal advice before signing it. It is also important for the agreement to be signed in good time prior to the marriage, although there is no specific set time period. If these basic safeguards are not met then it may be considered that less or indeed no weight should be given to the agreement in the event of a later dispute.
Readers may have heard about the case of Radmacher v Granatino, which was widely written about in the press. Following this case, prenuptial agreements are increasingly likely to be upheld. A major factor in considering the enforceability of a prenuptial agreement is the need for full and frank disclosure of all financial resources, and although a prenup could be upheld without this, it is a significant risk. If there is inadequate financial disclosure, a court may decide in future that it is not fair to uphold the terms of the agreement and that less weight should be given to it. The courts are increasingly accepting that people wish to regulate their own financial affairs, which is the aim of a prenuptial agreement. However, in certain circumstances a court may depart from the agreement if it is considered insufficient provision has been made for one person and that it would be fair or just to do so.
If there are any major changes in your circumstances, such as a birth of a child, the prenup should be reviewed. It should also be reviewed regularly. Where children are born after entering into the agreement and no review done, or if they were not addressed in the agreement, it is more likely that the agreement will be overruled.
I am often asked who are prenups most suitable for. In my experience, many couples entering into the agreements are entering into second marriages, where one or both have children from previous marriages whose interests they wish to protect, or where one party has amassed significant assets prior to the marriage. Many prenups are intended to prevent one spouse from making a claim against the other in the event that the marriage breaks down, and to enable each to retain the property that they brought into the relationship. Such agreements are, in my view, well worth having. But prenups are not limited to these people, they are worthwhile considering for anyone who has any assets that they wish to protect, either current assets or anticipated future ones.
If you are considering entering into such an agreement, when weighing up the costs of a prenup in 2014 please do bear in mind the potentially huge costs and implications of using a prenup template instead of a properly drafted agreement. To ensure the greatest possible weight is attributed to the prenup it is advisable to make sure that it is expertly negotiated and drafted by an experienced family lawyer.
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