Start early, be transparent, review regularly and get specialist advice. These are our top tips when it comes to ensuring your pre-nup holds up when you need it.
While pre-nups might appear straightforward, the legal obligations are complex – and overlooking them can lead to a costly unravelling of the contract.
Previously we’ve explored the reasons why couples might choose to enter into a contracting out agreement – whether to protect separate property, clarify expectations, or avoid future disputes.
Read on for how you can make sure your agreement holds up when you need it. If you’re considering a contracting out agreement, or reviewing an existing one, it’s worth seeking expert legal advice to ensure your intentions are properly reflected and protected.
What makes a contracting out agreement enforceable?
Section 21F of the Property (Relationships) Act 1976 (the Act) sets out the following criteria for a valid and binding contracting out agreement:
- It must be in writing. A verbal agreement or an informal arrangement will not be sufficient.
- Each party must receive independent legal advice from a separate lawyer. This ensures both parties understand the implications of the agreement and are entering into it freely.
- Following giving this advice, each lawyer must certify in the agreement that:
- they have explained the effect and implications of the agreement to their client
- their client appeared to understand the advice and signed the agreement voluntarily.
- Each party must also provide full disclosure of their financial position – including assets, liabilities, income, trusts and business interests.
Failure to take any of these steps can lead to the agreement being invalid and set aside by the court.
This will mean that the division of your assets will default to the Act’s scheme, which could differ considerably from your intention.
Common pitfalls to avoid
To ensure your contracting out agreement holds up, consider whether your agreement complies with the following questions:
- Are you both signing this freely? An agreement can be invalidated if there appears to have been pressure or duress in signing – for example, shortly before a wedding.
- Is the agreement reasonable? If it appears the terms of the agreement are unfair or cause a serious injustice by putting one party into a significantly worse position, the agreement could be set aside.
- Have both parties disclosed all assets and liabilities? Failing to disclose an asset or its value could lead to the agreement being void.
- Have your circumstances changed? If your agreement was signed several years ago, it might no longer reflect your asset situation, and may be vulnerable to challenge. Consider updating your agreement regularly.
Best practice tips
- Start early. Having discussions early in your relationship before any major life events – for example moving in together or marriage – will remove uncertainty and stress should property division be necessary.
- Be transparent. Providing full financial disclosure to your lawyer can speed up the process and assist with clarity and security of your agreement.
- Review regularly. After significant changes in your lives, revisit the agreement. This could include children, inheritances or business growth.
- Get specialist advice. Work with lawyers experienced in relationship property to ensure the agreement is robust and tailored to your needs.
