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Jane Keir, Partner at Kingsley Napley
Pre and post nups
Prenups are often used as a plot device causing conflict and tension in TV dramas – most recently BBC’s the Split. The decision to ask for a prenup is often presented as lack of faith in love and the relationship’s future.
Luckily, real life need not be so dramatic. We talk to Jane Keir, partner at law firm Kingsley Napley 1 to find out why prenuptial agreements might be a sensible choice, given that approximately 40% of marriages end in divorce.2 We also discover more about their lesser known relative, the increasingly popular postnup.
What are prenups and postnups?
Nuptial agreements are legal contracts that are designed to plan how financial matters, including property and debts, will be handled if a marriage or civil partnership ends in divorce (or dissolution for civil partnerships).
The ‘pre’ or ‘post’ suffix simply indicates the timing of the agreement. Prenups are carried out before the marriage as part of the engagement period, and postnups are the post-marriage equivalent.
Postnups might be agreed because a prenup was never put in place, or to offer a chance to update the prenup contract. This is often the case if there have been changes in financial situations, such as a promotion, inheritance or newly acquired debt.
Who signs pre and postnups?
You might think nuptial agreements are reserved for the top 1% of wealthy people, living the private jet lifestyle, but they are far more common than that. According to research by the Marriage Foundation, one in five marriages now begins with a prenup – compared to only 1.5% back in the 1970s. 3
The research found that agreements are more common with senior managers and those who carried out some form of marriage preparation. The shift has also been driven in part by women – couples with female breadwinners or dual earners were more likely to sign a prenup than just male breadwinners.4
Common scenarios
Lives and finances can be complex and there are lots of reasons why a nuptial agreement might be required, but here are the most usual situations:
1. An individual who wants to protect their assets.
When there is a significant imbalance in the wealth brought to a partnership, it makes sense to create clarity about division of assets if required. It is possible to build in time related provisos. For example, if the marriage lasts past, say, five or ten years, the other party could be given an increased percentage of the assets compared to a lower amount, or zero, if the marriage ends quickly.
2. A business owner who wants to keep their business separate.
This is particularly relevant when it is a family business that would be threatened if divided. An established business can be protected with a prenup – something that shareholders will often require.
3. A second or third marriage, and blended families
Nuptial agreements are frequently used for subsequent marriages, particularly where there are already children. Individuals may wish for assets to be protected for children from a previous relationship. This can create confidence from the family to support the union.
4. Cross borders
For international couples where countries of marriage or habitation may have different rules on divorce, agreements can bring clarity. For example, some states of America are known as ‘community property states’ which means that property acquired by a husband and wife during the time of their marriage is owned jointly and must be split equally, regardless of who acquired it – unless an agreement is in place.
If much of a couple’s married life will be spent abroad, then an English prenuptial is unlikely to be sufficient. Couples will likely need separate agreements to bring the maximum chance of it being upheld in more than one jurisdiction.
5. In the case of marital difficulty
Where a couple is working on the marriage or reconciling after a separation, a postnup can bring security and reassurance. Jane says, “For example, all the assets might have been put in one person’s name, just out of convenience, and to restore confidence and facilitate a reconciliation, provisions might be made to reflect a fairer ownership of wealth.”
Why nuptial agreements make sense
The Marriage Foundation research showed that prenups do not appear to reduce or increase the likelihood of divorce.5 Agreements should lead to open communication and financial clarity, which can strengthen a relationship. And if it does come to divorce, a YouGov poll commissioned by Kingsley Napley showed that 41% of those polled agreed that nuptial agreements make divorce less stressful.6
As Jane explains, “Whether you are getting married for the first, second or even third time, nuptial agreements should be a standard part of your conversation and wedding related admin. So long as they are fair and entered into without undue pressure and with both parties fully understanding of each other’s financial positions and the contents, they can be very sensible and practical agreements.”
Are nuptial agreements enforceable?
While nuptial agreements are not strictly legally binding in England and Wales, if they are done properly, it is very difficult to challenge the terms. Jane says, “In fact, postnuptial agreements can be more likely to be upheld than prenuptial agreements because there is no looming wedding date putting pressure on the couple to sign up.”
The Law Commission recently published a report highlighting the need for legally binding agreements, a reform that would reduce complication and recourse to the courts.
What role can a specialist nuptial lawyer play?
Jane says, “We can have as much or as little involvement as needed. First of all, it’s key to have an open discussion about what a couple wants to achieve. We start from that point, leaving all legal jargon aside. I can then guide them on the appropriate level and structure of financial provision, as well as signpost to other services that might be needed, such as specialist tax advice or inheritance planning.”
Financial planning
Just like having your tax affairs and Will in place, nuptial agreements are a sensible part of your financial management and planning for the future. Holden & Partners can work hand in hand with legal experts to help you understand and plan towards your financial goals.
1 Kingsley Napley – When it Matters Most | Lawyers, Solicitors London
2 Divorces in England and Wales – Office for National Statistics
3 One in five weddings now start with a ‘prenup’ – Marriage Foundation
4 One in five weddings now start with a ‘prenup’ – Marriage Foundation
5 One in five weddings now start with a ‘prenup’ – Marriage Foundation
6 YouGov poll shows strong support for law reform on nuptial agreements | Law News | Kingsley Napley
