While the historical view of prenuptial agreements (‘prenups’) has been that they essentially organize the divorce before anything has even gone wrong, there is a growing opinion that they are in fact more of a practical step as to how the financial arrangements are going to take place.
It is estimated that one in five couples entering their first marriage will now have signed a prenup. Prenups are a sensible precaution, that function to protect marital assets and provide a level of certainty about what would happen if a marriage broke down. However, when couples enter their first marriage, perhaps in their 20s and 30s, their assets are not necessarily as large and their lives are more simple. When it comes to second marriage, it is more likely that there will be more significant assets, pensions, homes, and children from previous marriages. The financial consequences, if this second marriage broke down, could be huge.
For example, there could now be a new spousal unit to support, further children to leave assets to, and balancing the needs of the new spouse with their desire to support their children from a previous marriage. By making a prenup before a second marriage, the concerns can be addressed before they even appear.
Couples can decide how they wish to support themselves during the marriage, make a strong plan for withdrawing retirement and pension assets, and commit to spending household expenses either equally or in a percentage split. Both parties to the second marriage may be approaching from different income levels, which may lead to arguments down the road when this has not been considered. By considering any financial issues, they can consider their marriage from a practical and level perspective, giving themselves clarity and focus into their second marriage.
While prenups are not binding in law, they are advisory and will only be departed from by the Courts if they would lead to manifest unfairness. They can vary in terms of content, from being very simple and setting out limited points, to being very complex and delving into great financial detail. Decisions about what is right must be made, and will differ from marriage to marriage, based on a range of factors such as economic circumstances, the ages of the people entering into the marriage, any children in the current and previous relationships, and the earning potential that both people may have.
Both people cannot see the same Solicitor, as there are conflict issues, and it is crucially important that independent legal advice is obtained well ahead of the marriage so that the agreement is fair to both parties. Both parties must also be open about their financial circumstances.