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Recent research conducted by Handelsbanken Wealth & Asset Management reveals that just 10% of married couples in the UK have a prenuptial agreement.
A prenuptial agreement is a legal document entered into between a couple ahead of their marriage, which sets out how they wish for their assets, income and pension to be divided if they separate.
Interestingly, the research suggests that increasingly younger married couples are more likely to have a prenuptial agreement (40% of those aged 18 to 35 years) than older married couples.
Of those asked why they did not have a prenuptial agreement in place, for 32% this was because they did not consider that there was a risk that they would separate in the future. This is particularly interesting in light of the statistic that nearly half of marriages today end in divorce.
Considering how they thought assets would be split in the future, 17% planned to share all assets equally, regardless of provenance of the wealth and 16% were not concerned about how assets were split. Of those surveyed, some 10% did not know what a prenuptial agreement was.
Comment
Prenuptial agreements can be an important tool in generational wealth planning and structuring. For those bringing substantial wealth to a marriage, likely to inherit a significant sum, wish to protect a family-run business, or perhaps have been married before, giving proper time and thought as to what should happen if a marriage does not last, is vital.
The starting point for the division of assets after a marriage is equality, and although the court has discretion to move away from this, many families do not want to take the risk that the outcome may not reflect the provenance of a couple’s wealth, damage careful family wealth planning or provide them with an uncertain outcome and lengthy and expensive legal proceedings.
Prenuptial agreements are not automatically binding within England and Wales, but provided that they are properly entered into, meet both parties’ needs and certain requirements are met, increasingly such agreements are being recognised and upheld by the court.
Time should be taken in the lead-up to a marriage to have proper conversations about wealth planning and ensure that a couple are clear as to their views and expectations, and that this is properly recorded in a prenuptial agreement.
For more information or to discuss how a prenuptial or postnuptial agreement may benefit you, your clients or contacts, please contact Sarah Green.
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