Prenups; keeping it in the family

Pre-nups; what you need to know and how they can protect you, your family and your farm or business.

‘We aren’t super-rich, so it isn’t for us’

‘If we split up, I am sure we’d just agree’

‘We don’t have millions in the bank or a yacht, what do we need a pre-nup for?’

These are just some of the things I hear when I talk to clients about pre-nuptial agreements; and understandably so if their hazy reputation is anything to go by. Pre-nups get a rough ride in the media and have long been seen as the reserve of the super-rich. But in recent years pre-nups have slowly crept their way into succession and inheritance planning discussions as a useful tool for couples, and their families, as a way to preserve farms for generations to come.

Of course, the elephant in the room is that pre-nups don’t do much to tick the ‘romantic gesture’ box. Lots of other lawyers use the analogy that a pre-nup should be thought of as you would a will; not a pleasant scenario to think about, but something you should do. But let’s be frank here; we will all, eventually, leave this mortal world; whereas not all marriages end.

The way I put a pre-nup into context for my clients is that they should think of the need to consider one when planning a wedding just as they think about travel insurance when they are arranging a holiday. The fact is you don’t plan the trip of your life and take out travel insurance with the mindset of hoping you need it; you do it so you and your family are protected if something unexpected or painful happens. It is a small outlay now, for peace of mind and financial clarity should the worst happen.

The aim of a pre-nup is that it will reduce disputes should a married couple separate, by agreeing in advance what their financial relationship would look like on separation and what would be ‘off the table’ when splitting matrimonial assets. The pre-nup, like any legal document, can be as narrow or as wide as the engaged couple wish; it can simply name a specific asset which they agree would never be shared on divorce, like a family farm, land or partnership, or go into greater detail.

Many clients ask me whether a pre-nup is legally enforceable; the simple answer is that if certain clear requirements are followed in the process of preparing the document, then on balance the court will uphold them as a clear demonstration of the intention of the two people entering into it. Whilst that is not quite the ‘automatically binding’ guarantee that some may expect, a well-drafted and professionally handled pre-nup should hold up to even the strictest judicial scrutiny without concern.

Those pre-nups which the courts have not upheld in the decade or more since they have been given legal effect have failed to meet the factors set down by the court; the issue has not been a simple disregard of a validly entered into pre-nup.

To ensure a pre-nup will be given the fullest weight, these questions should be on the lips of your trusted legal advisor;

  • Is the agreement fair? If the terms leave one party with nothing it is unlikely to be upheld. A well-drafted agreement which meets both parties needs, even if one is more substantially provided for than the other, would be fair and likely to succeed;
  • Has there been full financial disclosure? Keeping your true financial picture quiet, or failing to disclose something ‘material’, is a big no-no. The disclosure could a summary, or you might both agree to needing a valuation of some aspects, but keeping quiet is not an option;
  • Have both parties obtained independent legal advice? The court will have a keen eye on whether a financially weaker party really understands the implications of the agreement and their financial sacrifices;
  • Have you provided for any child/children, especially ‘future’ ones? The agreement should adequately provide for a child or leave the issue open to discussion at the time it comes into effect on separation; without a child’s financial needs being met, there is likely to be some departure from the agreement;
  • Was the agreement entered into freely, without pressure or duress? and
  • Timing is key; was it finalised at least 21 days before the wedding? Ideally it will be far in advance to allow plenty of time for open discussion and clear legal guidance.

If each of these steps is followed, then there is little reason a judge should direct something other than that which has been agreed between two consenting adults who were sensible when times were rosy.

One thing to note is that, whilst we talk about ‘what would a Judge order’, many parties who separate having previously entered into a pre-nup are keenly able to agree how to finalise their settlement with clear reference to their pre-nup, without having to challenge the contents nor litigate matters at all.

If there is a dispute about a pre-nups validity which requires an application to the court, it is worth bearing in mind that recent caselaw has shown that the Court is very reluctant to write off the whole arrangement; it can be that the Court departs from some of the agreement in order to meet one party’s or a child’s need, but materially leave the asset/s in the pre-nup otherwise unencumbered.

Marjha’s Top Tips;

  • Don’t write off a pre-nup as ‘not for us’. The reality is that everyone should consider a pre-nup if there is an asset, business, partnership or possibility of inherited wealth; it helps you decide how you would want to deal with things should you ever separate. Doing this when the sun is shining is far easier then when the clouds of separation have descended.
  • Have the discussion early; the more open you can be, and the more you can agree in advance, will smooth the process and can reduce the legal costs in drafting it.
  • Get legal advice as soon as you can; bespoke and tailored advice is key, without the time pressure of an impending wedding. That advice should include wills which mirror what the agreement achieves, and should be part of wider succession and inheritance planning where needed.

Want to know more? Please get in touch with Partner and Head of Family Marjha Golding-Evans on 01633 603178 or