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Pre-Marital Agreements

Pre-Marital Agreements (sometimes called Pre-Nuptial Agreements or “Pre-Nups”) can be a good idea for couples who are bringing different levels of assets or income to the marriage, or where one of the parties wants to protect assets received from a previous divorce.


If a Pre-Marital Agreement is not in place, then on divorce the starting point for a division of all assets and debts, including pensions, would be an equal division.  Pre-Marital Agreements can create a deviation from the 50/50 split scenario. 


For years the status of these agreements was in doubt, but recent case law means that a court is now highly likely to uphold the terms of a Pre-Marital Agreement even if those terms deviate from an equal split, providing both parties’ needs are adequately met.


However it remains a fact that Pre-Marital Agreements are not strictly legally binding in the courts and a judge still has the power to tear up all or part of the terms of the Agreement if he considers it unsatisfactory in meeting one party’s needs.  We can expect the law to be clarified in future years.


If you are considering buying a property together in the future but still wish to retain your own individual shares in the new property, you should seriously consider entering into a 'Deed of Trust'.  This will record the respective shares and also determine how payments are going to be made towards the mortgage and perhaps other outgoings. 


It is also a good idea to think about what happens if one party funds significant improvements to a jointly owned property in the future e.g. by paying for a conservatory or loft conversion.  If no Deed of Trust is in place, then the presumption of equality would remain, even where one party puts in much more money than the other.


Commonly, the effect of a Pre-Marital Agreement is for each party to keep their own assets and not to have a claim on any future assets.  If one party expects to receive an inheritance in the future, then the agreement can preclude the other party making a claim on the inheritance if the appropriate wording is included.


People entering into a Pre-Marital Agreement need to be careful with investments and savings to ensure that they have their own money available in the future and are not left penniless in the event of a divorce.  There is some protection from the courts in this event because if a party is left with nothing upon divorce, then a judge ultimately does have the power to over-ride the terms of any agreement.  However it would be unwise to rely on this as litigation is a very costly and uncertain enterprise.


Both parties must enter into the Pre-Marital Agreement freely.  It is good practice for parties to sign the agreement no less than one month before their wedding.  Alternatively, parties could enter into an agreement after the wedding – this is known, logically enough, as a Post-Marital Agreement.


If the parties go on to have children it may become necessary to review the Pre-Marital Agreement.  Even if no children are born, it is normal for a Pre-Marital Agreement to have a periodic review clause built in to allow for unforeseen events.


If one of the parties is not from England & Wales or assets are held abroad, it is strongly recommended that advice is taken from a lawyer in the relevant country. This is because although the Pre-Marital Agreement may satisfy the courts of England & Wales, if a divorce were to be started in a foreign country the courts in that jurisdiction might deal with matters differently.  For example the agreement might not be recognised at all or the agreement may be completely legally binding, with no discretion of the court to remedy obvious unfairness. 



For more information please contact:
Bells Solicitors Limited.   Registered in England and Wales no. 07827988.   Authorised and regulated by the Solicitors Regulation Authority.   SRA number 569030.   VAT registration number 137595285