Can I Preserve My Family’s Wealth With a Prenuptial Agreement?

If you are contemplating marriage or a civil partnership, entering into a prenuptial agreement is an effective mechanism to ensure your family wealth is ringfenced and preserved.

A prenuptial agreement is a transparent contractual agreement which clearly outlines an agreed financial settlement between spouses and civil partners in the event of a divorce.

If you plan on getting married, you may wish to enter a prenuptial agreement with your intended spouse to protect any wealth you have accrued before the marriage.

Prenuptial agreements can also be used to preserve inheritance or expensive family heirlooms to ensure that family wealth remains within the family and is passed on to the next generation as intended.

Prenuptial agreements are not only designed for those with significant wealth but are a useful document for any couple intending to marry to provide certainty as to who gets what in the event of a relationship breakdown.

The benefit of a prenuptial agreement is that it provides clarity and certainty where there may be a disparity between your and your partner’s respective financial positions prior to the marriage.

A prenuptial agreement can also prevent expensive court proceedings in the future and reduce issues in disputes on divorce.

As well as preserving pre-marital wealth and inheritance, prenuptial agreements can also define what assets are deemed to be ‘matrimonial’ and those that are deemed to be ‘non-matrimonial’ property.

They can also be used to protect wealth and assets for any children from a previous relationship.

Prenuptial agreements are not legally binding in England and Wales.

Nonetheless, the case of Radmacher v Granatinon (2010) outlines that the courts will uphold a prenuptial agreement where certain factors are satisfied.

A prenuptial agreement will have the best chance of being upheld where the following criteria have been met: 

1. Each spouse received independent legal advice prior to signing the document. 
2. Both parties have exchanged financial disclosures prior to entering the agreement. 
3. Both parties are given the opportunity to raise questions as to the other’s finances. 
4. The terms of the agreement are fair and reasonable. 
5. Neither party is placed under undue pressure to enter into the agreement.
6. Sufficient time has lapsed between the date that the parties sign the agreement and the wedding or civil partnership. This is to ensure that both parties have sufficient time to consider all the terms of the agreement. 
7. The agreement contains a review clause. This is to ensure that the agreement remains fair for both parties over time. A review clause will provide for reviews of the agreement where a particular event has occurred (e.g. the birth of a child) or where a certain period of time has passed. 

The case of KA v MA (2018) outlines that prenuptial agreements can play a role in protecting family wealth.

The case confirmed that on divorce, the court can move away from the starting position of an equal division of the assets built up during the marriage where a prenuptial agreement was previously agreed upon and focus instead on the parties’ financial needs.

It is recommended that you finalise the prenuptial agreement in sufficient time prior to your wedding (this should be at least six weeks) so that both parties have enough time to consider the terms of the agreement.

Ordinarily, the document will outline that the agreement will remain valid for 12 months after the parties sign it. 

Although, on the build-up to your marriage, you are unlikely to be thinking about what will happen to your finances in the event of a relationship breakdown, entering into a prenuptial agreement is a sensible step to ensure the protection of any non-marital assets as far as possible.