A pre-nuptial agreement, also referred to as a prenup, can be helpful to a couple who are intending to pool their resources and marry. A similar type of agreement is also available to couples who are already married. We take a look at the advantages.
Pre-nuptial agreements are sometimes thought of as just for the wealthy. However, they can be beneficial to all couples.
What can you include in a pre-nuptial agreement?
A prenup will usually set out what will happen to your property and assets, to include assets you may acquire in the future, such as an inheritance, should you divorce or separate.
Although a pre-nuptial agreement is not legally binding, the courts will usually keep to the terms of a prenup when making a financial order on divorce provided that:
- You both made full financial disclosure to the other before the prenup was signed
- The agreement is correctly drafted and executed as a deed
- Both parties have taken independent legal advice before signing and understand the implications of signing
- Neither party was subjected to undue influence to pressure them to sign and there was no misrepresentation
- The agreement does not prejudice the reasonable needs of any children
- The agreement was made more than 28 days before the marriage
- A post-nuptial agreement is very similar but is made after the marriage.
What are the benefits of a pre-nuptial agreement?
There are several potential benefits of entering into a pre-nuptial agreement, including:
Openness and honesty
By talking about difficult issues early on, you will be entering the next phase of your lives on an open and honest basis. You can work out what you both want to happen in certain situations and what you believe is fair and reasonable should you ever need to separate your assets.
Financial reassurance
Putting a prenup in place can give you some reassurance over your financial position. Should your relationship become difficult, you will not have to guess what you might be entitled to in the future or worry that you could be left with nothing. Unless there is a reason not to follow the terms of the prenup, the court will usually make an order in similar terms.
This can be an advantage if one of you gives up your career to care for children. The prenup could make provision for you to be compensated financially for this by receiving a larger share of the matrimonial assets.
Protecting your assets
If you have more assets than your partner, making a prenup can protect them. For example, if you already own a property or you have inherited money or may inherit in the future, you can use the prenup to specify that these assets will remain yours, should you ever divorce.
Protection from debt
The prenup can also be used to specify what will happen to debts run up by one party. This could be debt that one person already has or debt incurred during the marriage.
To adequately provide for children from another relationship
If you have children from another relationship, you can use the prenup to protect your assets for them. It is important to make a Will as well when you marry to ensure that your estate will pass in the way that you want it to.
Can make a divorce faster and less contentious
If your relationship should end in divorce, then having a prenup in place can make the process of obtaining a financial order quicker and less acrimonious.