It may not be romantic – but you should really consider a prenup

While discussing the cost of getting married with my friend, a director at a UK law firm, she said something in passing last month that I knew I had to investigate further.

“Talia,” she said, “prenups and cohabitation agreements are becoming more popular. We’ve had a 50 per cent increase in the number of prenups we’ve drawn up since 2023.”

When we think of prenups, we typically think of celebrities and the super-rich.

But with people settling down later in life than previous generations, plus the rise of remarriages and blended families, people are entering into relationships with substantial assets. According to Co-op Legal Services, the average value of the assets included in their prenups is between £500,000 and £600,000.

And if prenups and cohabitation agreements lead to couples having frank, open, productive conversations about money, then I’m all for it.

What is a prenup?

A prenuptial agreement, to give it its full title, is a written contract that outlines how assets will be distributed between you and your partner should your marriage end in divorce. It’s agreed to and signed by a couple before marriage.

Kim Crewe, director of client wellbeing for Family Law Partners in Brighton, says prenups protect wealth and address fairness in a relationship.

“We’ve had a 50 per cent increase in the number of prenups we’ve drawn up since 2023.

“It is possible to have an agreement that protects people’s wealth and addresses the needs and fairness of both parties in a relationship.

“It doesn’t mean that you’re not sharing. It’s about each partner taking time to reflect on their financial situation now and what that would look like if the relationship came to an end.

“It’s about having an open and honest conversation and being transparent about finances, which is important, especially when a relationship is getting more serious.”

Inheritance is top reason for prenups

According to research from Co-op Legal Services, the top three reasons for creating a prenuptial agreement are one or both individuals will inherit money and/or assets in the future (19 per cent), both parties get to have a say on how assets will be split if they decide to divorce (18 per cent), and financial savings held in a bank account (17 per cent).

Ben Evans, lead family solicitor at Co-op Legal Services, says it helps to think of prenups as an insurance policy.

“Fundamentally, these types of agreements boil down to risk management. Prenups provide structure and certainty in the unfortunate event of a relationship breakdown.

“Because at the point you enter into a marriage and say ‘I do’, you open up the door to a number of claims available to each other that weren’t there before marriage. Your spouse can make a claim against your pension, for example.

“These agreements make it clear what happens if you separate. That way, if you do separate, you can avoid a messy breakup, expensive lawyers and court proceedings.

“There’s definitely been a rise in these types of agreements.

“The younger generation are more aware of prenups being an option and they may have learned from their parents’ mistakes and don’t want that to happen to them.

“And with more people putting off marriage and focusing on their careers, they may have inherited or acquired wealth by the time they get married. Then there are those entering into second marriages.”

Postnuptial agreements

There are also postnuptial agreements. These provide the same outcome as a prenup but are agreed and signed by a couple after the marriage has taken place.

Inheritance is a good example of why people might consider a postnup. When parents want to leave money to their adult married child, they might want a postnuptial to protect that inheritance should their son or daughter split from their spouse.

While prenups are for those planning to marry and postnups are for those already married, cohabitation agreements are for people living together but not planning to tie the knot.

Cohabiting couples are the fastest growing type of family in England and Wales, yet they have little legal protection in the event of a separation. And while common-law marriage doesn’t exist, the myth persists.

What is a cohabitation agreement?

A cohabitation agreement is a legal document between unmarried couples who are living together. It sets out arrangements for finances, property and children while you’re living together and if you split up, become ill or die.

Kim Crewe says cohabitation agreements are popular with mid- and late-lifers – those starting a new relationship in their forties, fifties and sixties.

“We’re finding people who have been through a divorce and have met a new partner they want to live with are more likely to draw up a cohabitation agreement.

“They know how difficult and messy divorce is. And couples who live together are more vulnerable as they don’t have the protection of the law like a married couple do when it comes to the division of assets.”

Selfish or fair?

Before looking into this subject I would have thought prenups and cohabitation agreements were selfish. A money grab by the partner with assets, if you like.

I can now see that these agreements can aid financial transparency in a romantic relationship. And if you’re building a shared life together, money matters.

Ben Evans says: “I can understand the perception of it coming across as being a selfish act.

“But it’s there to avoid uncertainty and have frank, open discussions before people enter the significant step of marriage and cohabitation.

“Those who do have an agreement will undoubtedly agree it’s beneficial in avoiding conflict and acrimony down the line. Communication is key.”

As Kim Crewe says: “It’s less selfish, more putting everything on the table.

“People don’t like to talk about money. They find the process of negotiating a prenup emotionally painful and difficult. It can bring up anxiety and mistrust.

“When I work with couples, I make sure each of them feels heard and also try and unpick why they want the prenup – what’s the underlying reason?

“It’s not just about protecting your wealth but thinking things through and coming back to that word ‘fair’ – what is a fair outcome for both parties?

“Early preparation is important. Some people leave it until three months before the wedding to mention a prenup and that can bring up feelings of mistrust and can destabilise the relationship. Have the discussion early on, at least six months ahead or more.”

Are they legally enforceable?

Prenups, postnups, cohabitation agreements… while they’re not strictly legally enforceable, provided both partners are fully informed of what they’re agreeing to, they will be considered should legal proceedings arise.

Ben Evans says: “Any agreement does have to be appropriate and fair in the eyes of the law. The law is a safety net – if an agreement is unfair, a court is unlikely to uphold the terms.”

Talia Loderick is a money coach (talialoderick.co.uk)