7 Ways to Create Bulletproof Prenuptial Agreements for High Net Worth Clients

For high net worth (HNW) individuals, entering a marriage is an emotional and personal commitment as well as a financial event. With complex asset structures, business interests, and potential inheritances at stake, the desire for clarity and certainty is paramount. A primary tool for achieving this is a prenuptial agreement.

Often misunderstood, a prenup is not about planning for failure. A prenup is a strategic and pragmatic tool for financial planning. Its core purpose is to establish a clear, pre-agreed roadmap for what would happen in the event of a divorce, providing you with control over a future financial settlement for divorce.

By agreeing on terms when the relationship is strong, you can avoid the uncertainty, conflict, and substantial legal costs that can arise if a marriage breaks down.

The Radmacher vs Granatino case

In England and Wales, the legal framework for prenuptial agreements was fundamentally shaped by the landmark Supreme Court case of Radmacher v Granatino [2010].

The key principle established by this case is that courts will give significant weight to an agreement and are likely to uphold it, so long as it was entered into voluntarily by both parties, with each fully understanding the terms. The court will only intervene if holding the couple to the agreement would be unfair.

So, how do you create a resilient prenuptial agreement that stands the best possible chance of being upheld?

Here are seven essential ways for HNW clients to fortify their prenuptial agreement.

1. Commit to full and frank financial disclosure

The absolute foundation of any robust prenup is complete transparency from both parties. Each person must provide a full and frank disclosure of all their assets, liabilities, and income, no matter where they are in the world. For HNW individuals, this is often a complex undertaking.

This includes:

• Business interests, including shareholdings and director’s loans.
• Offshore assets and complex trust structures.
• Pension funds, including complex defined benefit schemes.
• Property portfolios, both in the UK and internationally.
• Significant expected inheritances.

Concealing assets or providing misleading valuations will fundamentally undermine the agreement. A court will not enforce an agreement where one party was not given the full picture, as they could not have had a “full appreciation of its implications” [UKSC 42].

2. Secure independent legal advice

It is non-negotiable that both parties must obtain their own, independent legal advice from a specialist family law solicitor. One solicitor cannot advise both parties. This ensures that each person fully understands the terms of the agreement, their rights, and the potential claims they would be giving up.

For HNW clients, your solicitor should have specific experience in high-value cases. They should understand the nuances of valuing complex assets and drafting provisions that protect business interests or dynastic wealth.

The Law Commission has recommended that for a nuptial agreement to be binding, the parties must have received legal advice. This underscores its importance in the eyes of the law.

3. Sign in good time and free from pressure

A prenup signed under pressure or duress will not be upheld. A classic red flag is presenting an agreement for signature just days before the wedding. This can be seen as exerting undue influence, leaving one party feeling they have no choice but to sign.

To demonstrate that the agreement was entered into freely, it should be negotiated and signed well in advance of the wedding; ideally, at least 28 days before the ceremony. This provides a clear cooling-off period and shows that both parties had ample time to consider the terms without the immediate pressure of the upcoming nuptials.

4. Make sure the agreement is fair and meets needs

This is perhaps the most critical element. While a prenup allows you to depart from the standard 50/50 sharing principle, it cannot be used to create an unfair outcome that leaves one party destitute. The court’s assessment of fairness will always prioritise meeting the financial needs of each party and, most importantly, any children of the family.

In HNW cases, “needs” are often interpreted generously to reflect the standard of living during the marriage. An agreement that provides for suitable housing and sufficient income for the financially weaker party is far more likely to be upheld than one that attempts to leave them with nothing.

5. Be meticulously clear and unambiguous

A prenup must be drafted with precision. Any ambiguity can create a loophole that could be challenged later, defeating the entire purpose of the agreement. A specialist solicitor will ensure the agreement clearly defines key terms.

For HNW clients, this includes:

• Defining “matrimonial” vs. “non-matrimonial” property: Clearly state which assets are to be kept separate, e.g. inherited wealth, pre-marital business interests and which are to be shared.
• Addressing asset growth: Specify how the growth in value of non-matrimonial assets will be treated.
• Business provisions: Outline how a business would be valued in a future financial settlement for divorce and how a spouse’s share would be extracted without damaging the company.

6. Plan for the Future with Review Clauses

A marriage is a long-term partnership, and circumstances change. A prenup that is fair on day one might seem less fair after 15 years and two children. To account for this, robust agreements often include “review clauses” or “sunset clauses.”

A review clause can trigger a mandatory review of the agreement’s terms upon a specific event, such as the birth of a child or after a set number of years. This demonstrates that the agreement is a dynamic document designed to remain fair over time, which significantly increases the likelihood of it being upheld by a court.

7. Address the International Dimension

High net worth individuals often have international ties, whether through citizenship, property ownership, or business operations. Different jurisdictions treat prenuptial agreements very differently. An agreement considered binding in one country may be ignored in another.

If you or your partner have connections to other countries, it is vital to get legal advice in all relevant jurisdictions. This ensures your prenup is structured to be as effective as possible, regardless of where you might live in the future.

Taking Control of Your Financial Future

A prenuptial agreement is the most effective tool available for HNW couples to provide certainty and predictability for their financial future. By following these seven key steps, you can create a robust, resilient agreement that protects your assets and provides a clear, mutually agreed-upon framework.

This ensures that if the marriage does end, the terms of the financial settlement for divorce have already been determined with care and foresight, allowing both parties to move forward with clarity.

To discuss how a prenuptial agreement can be personalised to your individual circumstances, learn more at Maguire Family Law Prenup & Postnup Services.

References

Law Commission. (2014). Matrimonial Property, Needs and Agreements (Report 343).

Radmacher (formerly Granatino) v Granatino [2010] UKSC 42.