Key things to include in your prenup agreement

Are you about to get married? It’s likely that you’ll be busy with getting everything ready for your wedding day. But if taking out a prenup before you tie the knot is on the to-do list, you’ll need to think carefully about how you want to approach it and what needs to be included in the agreement.

What is a prenup?

A prenuptial agreement, commonly known as a prenup, is an agreement made between a couple before they get married or enter into a civil partnership. It covers how they want to divide their assets in the event of a divorce or the end of their civil partnership.

High profile cases often make headlines, but this isn’t just something celebrities do. More people are entering into this type of wealth protection. While prenups were once viewed as unromantic or pessimistic, they are now considered a pragmatic approach. In fact, a 2023 YouGov poll revealed that Britons (42%) are most likely to see a pre-nuptial agreement as a good idea.

Although prenuptial agreements are not automatically enforceable in courts in Wales and England, if it meets the qualifying criteria set by the Supreme Court, it’s presumed that it will be upheld by the family court.

If you’re trying to establish what to include in your own prenup, there are some key areas to cover.

Financial assets

How you divide your financial assets is one of the most important areas to cover in a prenup agreement. This will cover properties, businesses, any savings you both have, and investments.

It also any includes other significant assets acquired either before or during your marriage. For instance, if you or your partner owns a business, you’ll need to establish how the business assets and income will be treated if your marriage ends in divorce.

By being transparent at this stage, you’re able to prevent any disputes in the future. It also provides clarity. You both know exactly what you’re entitled to.

Plus, specifying ownership and division of properties can protect individually owned homes or inherited estates from being considered marital property. Given the rising property prices in the UK, this aspect of a prenup is important for who have substantial real estate assets.

Debt arrangements

The prenup should also address how existing and future debts will be managed. These debts are likely to include mortgages, loans, and credit card balances, and they can complicate divorce proceedings if there’s no prior agreement in the form of a prenup.

When you seek guidance about this from family law and divorce solicitors, you’ll be advised to specify which debts are considered individual responsibilities and the ones that are shared between you. For example, if your partner has significant student loans, the agreement should state whether these will remain solely their responsibility or if they will be shared. This can mean that you or your partner won’t be unfairly burdened by the other’s financial obligations.

Potential sources of wealth

Inheritances and gifts are assets can complicate financial matters if they are received during your marriage. Specifying whether these assets will be considered separate property or shared marital assets before you get married could help to avoid disagreements.

For instance, if you receive an inheritance, this could be designated in a prenup as your individual property, ensuring it remains protected in case of a divorce. Additionally, any future windfalls, such as lottery winnings, should be addressed to prevent conflicts over newfound wealth.

 

Creating a thorough prenuptial agreement involves detailed planning and clear communication between partners. It’s worth taking the time to work out exactly what you want to include in the agreement and to speak to a legal professional who can help iron out the details.