While getting a prenuptial agreement might be seen by some as a lack of faith in the long-term success of their relationship (after all, planning for a potential divorce certainly isn’t romantic), it is in fact an act of great honesty and transparency for couples who are serious about building a future together.
A prenup enables partners to foster financial clarity, set expectations, and to protect each of their interests in a marriage, allowing for both parties’ needs to be clearly set out and honoured from the outset. Although it is a common misconception that taking such measures is only beneficial for the ultra-wealthy, you should take note that prenups are in fact valuable for couples at any financial level. To shed some light on why this is, we’ve outlined below some essential elements that every couple should consider including in their prenup before saying the famous words, ‘I do’.
Division of Property
Oftentimes, the first matter that comes to mind when discussing assets in any relationship is the subject of property, so it stands to reason that specifying how this would be divided in the event of a split is one of the most critical aspects of a prenup. This also includes defining what is considered as separate property (as in owned by one partner before the marriage) versus marital or community property (acquired during the marriage). A good prenup should therefore include specific clauses that outline exactly who gets what financially, from real estate to personal assets, so that there is a clear roadmap of how to separate any flats or houses owned by either party in case of divorce.
Spousal Support
Prenups can also specify whether one partner will pay spousal support to the other after separating, including the amount, duration, and conditions under which it will be provided. On this topic, some couples will agree to waive spousal support entirely if they wish to, so being clear about any plans or expectations here is very important – especially if one partner plans to adopt a non-earning role in the relationship, such as being a stay-at-home parent.
Debt Management
Another important, but sometimes difficult, subject to broach is the issue of debt. When two people marry, the general rule of thumb is that both of their individual assets become jointly owned – hence the age-old adage, ‘What’s mine is yours and what’s yours is mine’. However, what many fail to realise is that this also applies to negative assets like debt, which may have been accrued by one party prior to the marriage. A prenup can help here by assigning clear responsibility for this to the person that acquired the debt. For instance, it can stipulate that student loans remain the responsibility of the partner who incurred them, thus shielding the other partner from any liability.
Financial Responsibilities During Marriage
Most couples are likely not aware of the fact that a prenup isn’t solely about planning for divorce; it can also guide a couple’s financial management during their marriage. For example, a prenup can be used to outline how expenses, investments, and bank accounts will be dealt with to make sure there is clarity surrounding questions like will you maintain joint or separate accounts? Who is responsible for household bills or significant purchases? Who pays the mortgage or what percentage does each partner pay? Tackling these questions from the outset of a marriage helps not only to avoid any misunderstandings in future, but it also provides a foundation of transparency surrounding each partners’ expectations in the relationship.
Estate Planning, Inheritances, and Gifts
Prenups can also ensure that any existing inheritance and estate plans are respected during or post marriage. This is especially important for individuals with children from previous relationships or those expecting significant inheritances in the future. Clauses can therefore specify how assets will be distributed in the event of death; however, it is important to note that they should complement an existing valid will or trust rather than replace one. Furthermore, if one party receives (or previously received) valuable gifts, such as engagement rings, family heirlooms, or any monetary sums, a prenup can also clearly defined ownership of these.
Business Interests
If either partner owns a business, getting a prenup can help to protect those interests by specifying whether the business remains a separate property to them or how its value will be handled in the event of a divorce. Taking the time to specify this not only protects the business owner but it also helps to safeguard the business’s operations and employees that could be affected.
Custody of Pets
Finally, while it may seem a tad unconventional, many modern prenups will also go as far as to include clauses about who owns or gets to keep any family pets. It is in fact not uncommon for a fair number of divorce cases these days to include significant court proceedings concerning the custody of pets and related contact arrangements for both partners. Taking the time to be clear about expectations when it comes to how these furry members of the family will be dealt with if you were to separate from your spouse can therefore not only give you peace of mind, but it may also save you significant legal fees!
Other Considerations
With all the above in mind, it is also important to remember that circumstances do change, and so a prenup should ideally be amended to evolve with them. It is advisable to consider including provisions for periodic reviews and updates to reflect major life events, such as career shifts or having children, so that it is always ‘up to date’. Any such amendments must of course be mutually agreed upon and signed on to remain valid.
You should also make sure to avoid certain common mistakes that can end up invalidating your prenup once it has been put in place, such as:
- Incomplete Financial Disclosure: Both partners must participate in the Full Financial Disclosure of their assets and debts prior to drafting and signing a prenup.
- Lack of Legal Advice: It is highly advisable for each party to seek independent legal counsel to ensure they fully understand the terms and implications of the agreement.
- Unfair Terms: The terms of a prenup should be fair and not leave one party at a significant disadvantage, so beware of anything included that could be perceived by the courts as excessively one-sided as this can reduce the weight that will be attached to a prenup.
Neil Graham, a Partner at Grayfords LLP comments as follows:
“Whilst prenuptial agreements are not automatically fully binding, an agreement will be regarded by the Court as very persuasive provided it has been entered into at least 28 days in advance of the ceremony, the parties have each disclosed their assets fully, have each had the opportunity to take proper advice, have each entered into the document freely and willingly and provided the agreement does not cause any real unfairness. A prenuptial agreement should include content that demonstrates each of the above has been satisfied in order to maximise the likelihood of it being fully persuasive under the current law and fully enforceable if the law ever changes in the future. It is always sensible to obtain proper expert advice from specialist lawyers, such as Grayfords, when drafting the agreement and to start the process at least two months before the ceremony in order to maximise the chances of the agreement being fully effective.”
Are you considering getting a prenup? Our expert family law solicitors at Grayfords can help by guiding you through the entire process from start to finish. Don’t hesitate to call us on 020 7100 6100 to book your free consultation today and find out more about how they can help.
