A Look at the Pros and Cons of Prenuptial Agreements
Prenups are not just for celebrities and the super-rich, and are becoming increasingly popular with everyday couples. Should you consider one?
Spring is in the air, and that means the wedding season will soon be in full swing. But today, there is an additional item on many couples’ things to do list. As well as deciding on the venue, the guest list, the dress and the honeymoon, a growing number of husbands and wives to be are drawing up prenup agreements before they tie the knot.
This sets out from the start how they will divide everything from assets to childcare in the event that the marriage breaks down. Some see this as a sensible and pragmatic move in the uncertainty of 21st century life, while others think it is dooming a marriage to failure before it even begins.
So what do you need to know about prenups, and should you and your partner think about drawing one up?
First, a little background. A prenuptial agreement is a formal, written agreement that sets out the ownership of all the assets within a marriage and specifies how these will be divided if the marriage breaks down. It includes property, belongings of value, bank accounts – anything you can think of with a value (either now or in the future) and it should be there.
There has been plenty of media discussion over the enforceability of prenups, not least because of their traditional popularity with the sort of high-profile celebrities who are never far from the tabloid press.
In short, the courts of England and Wales do recognise prenuptial agreements as an important factor – not binding factor – and they have the discretion to waive any provisions deemed unfair. This is particularly the case if provisions of the prenup are considered to adversely affect any children of the marriage.
This means that any prenup must be drawn up formally and professionally, and be signed and witnessed appropriately in order to be taken seriously by the court.
Pros and cons
The main benefits of a prenup are that each individual’s assets are protected and both parties are saved the significant heartache, stress and legal cost that can accompany later court proceedings in the event of divorce.
That means reduced conflict, less money going to the divorce lawyers and a smoother process for all concerned. It also means that if one party brings significantly more wealth into the marriage than the other, they have a better degree of protection.
The downside is that it is not the most romantic subject to bring up during your wedding plans. Some people are afraid to raise the topic at all, fearing that the very idea indicates a lack of trust or commitment. But the fact is that one of the biggest factors that leads to marriage break up is finances, so if you can discuss matters like this openly and confidently before you are even married, it is actually a very good sign for the years ahead!
Right for you?
So is a prenup right for you? The question is a very personal one, and is really down to you and your partner, but as a general guide, ask yourselves the following questions relating to each of you individually:
- Do you own property?
- Do you own other significant assets (e.g. worth £30,000 or more)?
- Do you own or part-own a business?
- Do you have other dependents (e.g. children from other relationships)?
- Do you earn £50,000 a year or more?
- Do you have significant stock options or profit shares in a business?
If either of you answered yes to any of the above, then a prenup could definitely be in your best interest.
But however you answered, now is the time to have that pragmatic conversation with your partner. You might just find that whatever you decide, it brings you closer together than ever.