Prenuptial agreements or ‘prenups’ were once the reserves of Hollywood stars and the mega-rich. However, they are becoming increasingly popular in any relationship where one partner has more assets than the other at the time of marriage.
They are particularly useful when one partner is expected to receive an inheritance, as a way of protecting assets should the relationship break down sometime in the future.
Prenups are more common abroad than here in the UK, particularly in the US.
So, what is the legal position regarding prenups in the UK? It may be surprising to learn that this kind of agreement is not actually legally binding in England and Wales. This is because, to date, there is no specific legislation regarding prenups.
However, in the case of Radmacher v Granatino 2010 the Supreme Court stated that in future cases prenups could be binding on the parties if three requirements were met;
- The agreement must be entered into freely;
To establish this the court will investigate whether each party has sought independent legal advice, which will indicate the parties knowledge of the terms of the agreement and therefore whether the parties entered into it freely
- The parties involved must understand the implications of the agreement;
There must be full and frank disclosure of finances before the prenup is signed so that the parties understand what they may be giving up
- It must not be unfair to hold the parties to their agreement in the circumstances prevailing.
The courts will always seek to ensure that the needs of children and the financially-weaker party are met, therefore the agreement must contain a provision for this for it to be upheld by the court.
In summary, although not yet legally-binding in the UK, prenups will probably be considered and respected by the courts, providing that the requirements mentioned above are met.
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