Prenuptial agreements were often thought to be preserve of the very wealthy – often older individuals where there was a significant imbalance between parties’ financial positions. There is however an increasing trend of younger couples eager to look at prenuptial agreements, which shows no signs of slowing down. Below are some of the factors that may have influenced this trend.
What is a nuptial agreement?
It is important to consider what a nuptial agreement is, and what a couple are hoping to achieve by entering into one.
Nuptial agreements include both pre and postnuptial agreements. They are contracts entered into by spouses, or future spouses, setting out how the couple’s financial affairs might be dealt with in the event of a divorce in the future. Although they are not strictly binding under the laws of England and Wales (which is unlike some other jurisdictions), they carry significant persuasive weight in the courts. The landmark Supreme Court decision in the case of Radmacher v Granatino in 2010 forms the basis of the current law in relation to nuptial agreements.
Whilst it is not possible to oust the jurisdiction of the court by entering into a nuptial agreement, they are considered a relevant circumstance of the case, which must be taken into account by the court. Nuptial agreements will influence a court’s decision as to how finances should be divided in the context of divorce and what outcome should be considered ‘fair’.
Provided the following criteria is met, there is a real likelihood that the agreement will be upheld:
- The agreement must be freely entered into;
- The parties must have a full appreciation of the implications of the agreement;
- It must be fair to hold the parties to the agreement in all the circumstances.
For the agreement to carry the maximum weight possible, full financial disclosure should be provided by each of the parties as part of the agreement. They should each be separately advised by competent family lawyers. Neither should unduly influence the other to enter into the agreement. Good family lawyers will advise around all these requirements if the wish is for the agreement to be as effective as it can be.
Nuptial agreements can be used for a whole host of different reasons and there are numerous triggers that can catalyse discussions between a couple as to whether one should be entered into or not.
Family Support
With house prices and the cost of living becoming increasingly expensive, couples might need to rely on their parents or other family members to pay for their wedding, buy their first home or meet their general expenses. With this in mind, more couples are acknowledging that, whilst financial support coming from one side of the family may be needed to give the couple the best start to their married life, it should also be protected, particularly given divorce is no longer uncommon.
Historically such discussions within families may have been awkward or a topic to avoid, however prenuptial agreements are now far more common and with an increased awareness of how effective they can be, family members are more open to discussing them. Professional advisors such as IFAs and accountants also now regularly encourage the supporting family member to consider such an agreement before recommending any assistance is provided to the marrying couple.
Family members are also frequently encouraged to consider their inheritance and tax planning by passing assets to family members at a younger age. It is often a condition imposed by the family member who wishes to pass down the assets that before they transfer the assets, such as property, the family business or a farm down the generations, a prenuptial or postnuptial agreement should be entered into.
Changing Relationship Trends
With divorce now being incredibly common and no longer a subject to be frowned on, most young couples know people who have divorced, whether it is their own parents, family members, friends or anyone else they may be aware of in the media.
Couples can no longer be certain that their marriage won’t end in divorce, so rather than discussions about prenuptial agreements being a taboo area, they are now something many young couples accept as a matter of practicality, particularly when they are all too aware of how expensive and emotionally draining divorce can be.
Historically, fewer couples would readily share their financial information with each other, however most individuals now have a fair grasp of their partner’s financial position. There are therefore often few surprises when sharing financial information within the disclosure process.
There is also far greater financial freedom amongst young couples, with both parties often having their own careers and assets to protect, either before or after their marriage. It is therefore unsurprising that more couples want to protect those assets for the future, particularly when are each in stable positions and confident they could meet their own financial needs, without relying on their partner.
Disparities in Financial Positions
There are a huge range of financial positions young couples can find themselves in, whether through support of family or their own career decisions. Whilst in the past people would pursue careers where they start at the bottom and very slowly progress, increasing their income over time, there are now alternative careers that may lead to high income levels and asset acquisition from an early stage. Certain career paths can generate high income levels at an early stage, such as influencers, professional athletes and city professionals. On the other hand, many careers can be particularly expensive to pursue leaving significant debt, which understandably, the parties may not wish to share.
Young couples may feel that they have more to protect or more to lose, which in turn might provoke a conversation about whether a prenuptial agreement should be entered into.
Celebrities
Nuptial agreements were previously viewed as incredibly unromantic and discussions about prenuptial agreements could potentially lead to more arguments and relationship breakdowns. Fast forward to today, and they are far more socially acceptable so, where in the past, the topic would have been avoided despite the necessity for a prenuptial agreement, couples are now openly considering them without any fear of criticism or argument.
It is well known that many celebrities have nuptial agreements, which in many senses is helpful in raising the awareness of them and encourages the public to consider them an option. Celebrities’ lives are shared readily through media channels, which often include weddings, finances, and separations – inevitably, this leads to a greater number of couples becoming aware of the possibility that nuptial agreements may be an option for them.
Conclusion
Prenuptial agreements are no longer considered an awkward subject to discuss, nor are they just available to the ultra-rich and famous. They carry a great amount of persuasive weight within the courts of England and Wales, provided they are drafted correctly.
It is important that competent advice is taken to consider whether a nuptial agreement should be considered. At Stephens Scown, we have a dedicated team who specialise in prenuptial agreements. Contact us today on 0345 450 5558 or enquiries@stephens-scown.co.uk