Prenups on the up?
Prenup – why would you want one? Not worth the paper they’re written on! We explain what they’re all about and why they now hold more sway in the event of separation.
In the US, prenups have been standard stuff for many years. On the face of it, they’re legally effective and should be binding on the contracting parties in the future. Yet historically, here in the UK, a prenup has been seen to be an almost worthless document. But, things are changing.
What is a prenup?
A prenup is a document that records the (soon to be) husband and wife’s (and civil partners) intentions should they separate in the future. It deals with the couple’s finances, and sets out who owns what, and therefore how things would be split if they separated.
It’s understandable that many find the contemplation of separation a difficult subject, right at the point when they’re committing their lives to each other! However, there appears to be an increasing acceptance of setting things in concrete – ‘just in case the worse happens’.
The UK courts have always had ‘the final say’ in any divorce settlement, and have been free to move away from any prenup agreement. At best, the agreements have been viewed as ‘persuasive evidence’ to courts. They’ve tended to be one of the various factors that courts have looked at when ruling on financial settlements. That’s left family lawyers with the view that they’re of questionable value.
So, why are things changing? Well, it all follows a recent case heard in the Supreme Court called Radmacher v Granatino. Now, courts are to be guided by prenups when deciding on who gets what. This is subject to certain guidance which will be covered in part 2 of this blog! As long as the terms of the prenup are ‘fair and reasonable’ to both sides then courts are likely to allow it to stand. They do however still retain the final say and have the power to over-rule the agreement.
So it is good news for the prenups of the future, and even in the last few months, we have seen the effect of the change (with many more couples entering into agreements than previously was the case). The change in the law gives couples more control of their futures, should the unexpected happen and separate.