Are pre-nuptial agreements legally binding in the UK?
The short answer is no, but this does not mean that pre-nuptial agreements are not worth entering into. Quite the opposite; if you are marrying and you have any concerns about how your existing assets or your future savings and asset purchases would be treated if you were to sadly divorce in the future, a ‘pre-nup’ is essential. It can have a drastic impact on the outcome of your finances in the event of a divorce.
No-one enters into marriage thinking that they will get divorced, of course. We are not here to say that you will get divorced! Marriage is a symbolic commitment, but it is also, legally speaking, a major financial commitment. You are vowing to share your ‘property’ with the other person. Property includes the obvious ones such as real estate and physical possessions, but it also includes savings, and any increase in the value of any investments during the marriage. If you do not want to risk a large proportion, and in some instances half or even more, of those assets remaining in your spouse’s ownership following a divorce, then a pre-nup is your only option.
A pre-nup is not a legally binding contract. This means that it will not necessarily be followed ‘word for word’, exactly to the letter, in the event of a divorce. This is to protect people from singing a pre-nup that would leave them in an impossible financial situation before a wedding, without fully understanding its true implications, and then being held to it at a later date.
In order for a court to uphold a pre-nup, it must have been freely entered into (i.e. not under duress) by both parties with a full appreciation of its implications. A full appreciation of its implications is generally viewed to require both parties having disclosed in full their finances to each other, and to have taken (or at least had the opportunity to have taken) proper legal advice before signing the agreement. This way, both parties understand what they are potentially ‘giving up’, or are protecting/ gaining by signing the agreement.
There is then a further sense-test that a pre-nup must pass in order for a court to uphold it on divorce. This is that it must not be unfair to hold the parties to their agreement in the prevailing circumstances at the time of the divorce. This is to allow for the fact that a couple can rarely, if ever, foresee what their life will look like at the time of divorce when they are signing the pre-nup before their marriage. They might have since taken on the full-time care of a dependant family member; they may have moved to a different part of the country; they may have taken on various financial commitments such as school fees and so on. Therefore the court retains some discretion in checking that following the terms of the pre-nup on divorce would not leave one party in a position of financial hardship or dire need. This is why it cannot be said that a pre-nup is legally binding.
To ensure that this ‘sense-test’ does not defeat the pre-nup, pre-nups are typically quite a flexible document. They will state some specific assets, or types of asset, that will not be shared with your spouse on divorce. This means that there will be no automatic concept of the assets being split between you just by virtue of your marriage – they will only be divided or sold in order for some amount to be paid to your spouse if there is a financial need to do so, i.e. some equity has to be freed up in order to help your spouse re-house or to pay for reasonable daily outgoings. However they will not set in stone every single aspect of financial considerations on divorce.
Do not hesitate to get in touch with us here at Edwards Family Law to assist you in drawing up your pre-nup. Equally if you are already married but you think an agreement on your finances would help you, we can advise you on a “post-nup” or “mid-nup”.