Recent research conducted by Handelsbanken Wealth & Asset Management reveals a significant knowledge gap surrounding the creation and implementation of prenuptial and postnuptial agreements among couples in the UK. According to the study, an overwhelming 89% of married or civil-partnered couples (c.22.7 million people) do not have a prenuptial agreement in place. This statistic highlights the need for greater awareness and understanding of these legal tools in wealth management, intergenerational planning and family law.
A Closer Look at the Statistics
The study found that younger couples, aged 18–34, are slightly more likely to have a prenuptial agreement compared to older demographics. However, 89% of those aged 35–54 and nearly 99% of those over 55 do not have such agreements.
The primary reason cited by 32% of respondents for not having a prenuptial agreement is a belief in the stability of their relationship, with many assuming they will not face separation. This sentiment was particularly prevalent among those over 55. Other reasons given included:
- A preference for equal asset sharing.
- A lack of concern about asset division.
- Confidence in resolving issues through communication.
- Worry that discussing a prenuptial agreement might undermine trust in the relationship.
Interestingly, 10% of couples admitted they were entirely unaware of what a prenuptial agreement entails, further underscoring the educational gap in this area.
Why Prenuptial and Postnuptial Agreements can be vital
Despite the hesitation or discomfort some may feel discussing prenuptial agreements, they play an essential role in financial planning, particularly in protecting inherited wealth or safeguarding business interests.
Over the last two decades, prenuptial and postnuptial agreements have gained traction in the UK, driven in part by London’s reputation as the “divorce capital of the world” and the English family law starting point of dividing marital assets equally upon divorce.
For couples who do have a nuptial agreement, the reasons often include:
- Financial peace of mind: Agreements can eliminate uncertainty about asset division.
- Protection of assets: This is particularly relevant for inherited wealth or family businesses.
- Avoiding disputes: A prenup can prevent lengthy and costly legal battles.
- Shielding from debt: Protecting one partner from the financial liabilities of the other.
Prenuptial agreements are especially valuable for entrepreneurs and business owners. These agreements can prevent disruptions to the business in the event of a divorce. The research also notes that some individuals are encouraged by their parents/grandparents to establish nuptial agreements to protect family wealth or ensure future financial security.
Legal Considerations and the Role of the Courts
While prenuptial agreements are not automatically enforceable under English law, they are increasingly recognised and upheld by Family Courts as evidence of a couple’s intentions. To ensure the agreement holds weight, certain principles must be met:
- Both parties must fully understand the implications of the agreement.
- The agreement must be fair and meet the financial needs of both parties.
- Each party should obtain independent legal advice from specialist family lawyers.
- Full financial disclosure is essential to ensure informed consent.
By adhering to these principles, couples can significantly increase the likelihood that a prenuptial agreement will be upheld in court.
The Wealth Planning Gap
Handelsbanken’s study highlights a broader issue: a lack of proactive wealth planning among UK couples. The findings indicate that:
- 60% of couples without a prenuptial agreement are aged 18–34.
- 89% of couples aged 35–54 also lack such agreements.
Christine Ross, Head of Private Office (North) at Handelsbanken Wealth & Asset Management, notes the discomfort many couples feel when discussing prenuptial agreements. However, she emphasises their importance, stating, “While conversations about prenups between couples can initially feel uncomfortable and may be perceived as displaying a lack of trust, they play a crucial role in safeguarding the interests and financial security of everyone involved. Those who do not have one in place face the risk of lost assets and diminished financial security.”
Ross also highlights the increasing involvement of parents in encouraging their children to consider nuptial agreements, particularly when family/generational wealth exists.
The Way Forward
The research underscores the vulnerability of many UK couples to the financial consequences of an unexpected separation. It also reveals a persistent lack of awareness and understanding of nuptial agreements and what they can do. Addressing this gap requires a concerted effort from financial advisors, legal professionals, and policymakers to educate couples about the benefits of these agreements and to normalise discussions around wealth protection.
Prenuptial agreements, when approached with transparency and fairness, are not about anticipating failure but ensuring financial clarity and security for both parties. As societal attitudes toward wealth planning evolve, these agreements will likely become a more integral part of marriage and civil partnership discussions in the UK.
How Hedges Law can help
At Hedges Law our Family and Wealth Planning Teams can assist you, working independently, or collaboratively.
Our Family Team will advise you on the steps required to protect your assets through nuptial agreements, draft robust agreements, and help you review them periodically to ensure they keep pace with your and your family’s needs.
Our Wealth Planning team can advise you on all areas of wealth and generational wealth planning to work alongside the nuptial agreements that you need.
Written by Ian Davies, Hedges Law, Family Law Team
“While conversations about prenups between couples can initially feel uncomfortable and may be perceived as displaying a lack of trust, they play a crucial role in safeguarding the interests and financial security of everyone involved. Those who do not have one in place face the risk of lost assets and diminished financial security.”
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