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The Rise and Rise of Pre-nups to Protect the Bank of Mum and Dad

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A recent article in the Daily Mail has highlighted a rising trend in parents using prenuptial agreements to safeguard their investment when helping children secure a place on the property ladder.

Once the preserve of the rich and famous, demand for pre-nups amongst young couples is increasing – at the insistence of the Bank of Mum and Dad, whose financial support is often the only way young couples can afford to buy their first home.

This financial support from parents in home buying is believed to total more than £5B every year, making the Bank of Mum and Dad one of the top ten mortgage lenders in the country.

Whilst pre-nups are yet to become legally binding in court, they have become increasingly persuasive documents and, when correctly drawn up, with courts more likely to give effect to their terms. This includes setting out how a couple would divide assets if they were to divorce.

 Like many law firms, Wilkinson Woodward has seen a steady increase in demand for pre-nups, particularly following the test case of Radmacher v Granatino [2010). Since the Supreme Court ruling in this case (which allowed the divorce of a German heiress to be dictated by the terms of her pre-nup), the pre-marital agreements have carried increasingly significant legal weight.