One in three
32% of young asset holders own cryptocurrency.
How Digital Assets Are Driving a Prenup Boom Among Young Brits
We surveyed 1,000 Brits with assets aged 18-44 (Gen Z and Millennials) to understand exactly how digital assets are driving the need for prenups.
A new generation is building wealth in ways the legal system doesn’t yet understand.
With digital content creators developing digital assets and younger generations investing in cryptocurrencies, the future of wealth continues to evolve.
This evolution has spiked the growth of prenuptial agreements amongst young Brits.
In fact, nearly 50% of Millennial and Gen Z asset holders are open to the idea of a prenup to safeguard their wealth when entering into a marriage or civil partnership. No longer viewed as a sign of distrust, prenups are now an important agreement for both parties.
Young Brits are changing the narrative and embracing prenups
Gone are the days of prenups viewed as a lack of trust in a partner or a romance killer in the relationship. Instead, for many a prenup is viewed as a pragmatic solution to safeguard their future. According to our survey data:- 47%Close to half
Of young asset holders are open to a prenup
- 25%A quarter
View it as a smart practical tool for their relationship
- 19%One in five
Are driven by a desire for clarity and to avoid future conflict
- 12%
Stick with the more traditional societal view of it being a sign of distrust in their partner
Hayley Trim on prenups:
We're still a long way off it being an automatic consideration when people get married, but I do think there's an increase in people thinking about it, and I think there's probably more of a sense of reality that when you're getting married, it might not work out.
Perhaps more people have seen their own parents, or friends go through a difficult divorce, and think, 'I don't fancy that much.'
In terms of legal progression, we have seen a greater acceptance of prenups from the courts. In a relatively short period of time, it's gone from the idea that a prenup was contrary to public policy, to it being something that is given considerable weight and will almost certainly be upheld by a court if it fulfils certain criteria. It's been quite a big shift in the legal sphere over that period of time.
Nathaniel Groake on prenups:
From what I've seen, the vast majority of the time it is still asset protection, regardless of age. If a young couple came to us and say, 'We're just starting out with our careers, we've got no money, we've got no family wealth, but we want a prenup.' that's very hard to draft. You're not actually trying to protect something, and you've got no real realistic view as to what the future may hold for that couple.
The English courts deal with finances on divorce by, at the very least, ensuring both parties' needs are met. So, unless that couple go on and make a lot of money individually, it's going to be very hard to draft a pre-nuptial agreement in the above scenario, albeit we can do it. It’s much easier, certainly from a legal perspective, to have a pre-nuptial agreement where one of the parties has, say, £5m at the date of the marriage or one party is likely to receive substantial gifts or inheritance from their family. We can then seek to ring-fence those ‘non-matrimonial’ assets.
It's certainly not like in some continental European countries where a marriage contract is the norm. That said, I think younger people are more amenable to having those discussions about what happens if their marriage breaks down. The conversation has definitely changed from 10 years ago, where people were more reluctant to talk about pre-nupital agreements. Now it's, 'We've been having this chat, we're both on board with it.' So, the discussion around pre-nups has moved on from stigma to realism.
The Digital gold rush: How modern assets are forcing the conversation
While many of the young asset holders in our research hold traditional assets, including property and stocks, it’s modern assets that have forced the prenup conversation to the fore. According to our data:One in five
17% are content creators with a monetised account who are looking to protect their creator assets
Nearly two thirds
58% of crypto currency owners are considering a prenup to protect their digital wealth and 65% of content creators are considering a prenup.
Two thirds
62% of content creators view their brand itself as a valuable asset that's worth protecting.
How does the law keep pace with content creators?
Hayley Trim and Nathaniel Groake from our family law team explain how the law needs to step up to keep pace with new digital assets and businesses.Hayley Trim explains:
"Influencers, people doing different things and making money in different ways, ultimately it's still a business. If we have any standard business, a traditional company or sole trader, then you get someone to value that business if you need to. It's just about getting the right experts who know enough about that industry to be able to give you the insight that you need.
We as lawyers are working with people who know what they're talking about. We try to keep up as much as we can, but we appreciate that we might not be completely up-to-the-minute, it's about knowing where to go to get that information that you need and working with the right people.
It's just about people learning, understanding, and feeling comfortable with these assets – the judiciary, the lawyers – but then obviously people having faith in the judiciary and the lawyers to understand it and to deal with it properly, and not thinking that, 'It's fine, it's crypto, I can just not bother with disclosing that.' That's when things get difficult, because people think, 'I can fly under the radar a little bit with that because it's not a real asset,' and the other side has total distrust, they think the other person's hiding a load of stuff.
It's about, people becoming comfortable with the assets and comfortable that the courts are going to deal with them thoroughly and fairly."
Nathaniel Groake adds:
The law in and of itself can keep pace with it, because these new ways of creating wealth are still assets or incomes, whichever way you want to cut it. There's probably a fear, because the older generation haven't been brought up with these assets, that judges and lawyers perhaps don't really understand these emerging asset classes, but I think that is wide of the mark.
For example, with cryptocurrency, there has to be a seed investment at some stage where money enters the cryptocurrency system. And once you can trace that, it's actually a very traceable asset. There's a real fear that you can never find cryptocurrency because it's not physical, that once it goes into that system, it's lost – but actually, you can trace it. There have been quite a few cases where they've tried to trace funds and haven't found anything, but they've had experts confirm that nothing existed, often presenting elaborate 'spider-grams' showing where different wallets were moving money or cryptocurrency around.
I think the bigger problem is its volatility. The way the current financial legal system works is that you do a financial disclosure exercise, known as a Form E, and then you do an updating disclosure, say a month before a final hearing. You have your bank accounts and your investments, and in cryptocurrency, within that month leading up to a final hearing, it could fall 50%, or increase 50% or even 500%, depending on the risk. Even on a day-to-day basis, it can vary so wildly that I think the system is probably going to evolve to actually have judges looking at real-time investment value.
Whereas at the moment, you get one valuation of your pension, and if that's within 12 months old, that's fine. I think the law will actually become more fluid. This isn't going to be in the next year or two, by the way, but probably longer term, they're going to look at it and say, 'Okay, I can see the value of Ethereum is X as at now, and therefore I'm going to make the order based on that, not on a figure that was two weeks out of date"
Relationship ROI: The new logic of financial planning
For Gen Z and Millennials, this shift towards prenups is rooted in “Relationship ROI”. These young asset holders have already invested in themselves, and it’s now time to invest in their future relationship with clear and transparent agreements. From our research, we see that 89% place a high value on financial transparency with their future plans.
These generations aren’t scared of setting boundaries and using legal documentation to outline wealth and assets at the very start of a marriage or civil partnership
For these young people, a prenup is now seen as a smart, proactive investment in a partnership's future clarity. It simply makes sense to have everything in writing to avoid any potential conflict in years to come. The majority of asset holders in our research (57%) believe the concept of Relationship ROI resonates with their future plans.
Proactive financial planning for young people:
Hayley Trim:"Financial planning together as a couple is obviously a really positive thing. I think it's harder to have those discussions about what happens if you split up. Having the prenup aspect of the conversation is more difficult than, 'Let's make sure we've got life insurance, let's make sure we've got Wills and powers of attorney,' because that's not talking about the potential for the relationship breaking down.
But for the people who do have that discussion —'Okay, we are going to get a prenup, we are going to talk through it'—there are aspects of it which can be really positive. You've got to give full financial disclosure, so you know what each other has got. You might not know that if you haven't gone through that process. And also, you're both taking legal advice, so you know what a fair outcome in the event that you split up should look like. You've got this additional layer of understanding and transparency that I think can possibly help with the underlying strength of a relationship. You know that you can't be left out in the cold and that there's a certain level you're going to have to get to."
The legal dilemma: What happens when digital assets are divided?
Today’s young asset holders are gripped with a crisis of confidence in the law’s ability to manage modern digital wealth. A huge 67% believe that the law hasn’t kept up with the digital world and is lagging behind when it comes to protecting digital assets.There is also confusion around what happens with digital wealth if a marriage ends. In the digital content creation realm, 40% believe the creator should keep the asset after a relationship breaks down. Yet 47% believe it should be split.
This lack of clarity and legal transparency is forcing many young asset holders to seek protection through private agreements.
By detailing their assets and how they will be split in a prenup, it allows couples to make decisions about their finances and assets in a fair and transparent way. Without having to rely on the legal procedures in divorce proceedings if they were to split up.
Nathaniel Groake adds:
"This is evolving quickly. In America, they're becoming part of pension funds. JP Morgan is recommending 0.5% in Bitcoin for their pension plans. It's going to become more and more common.
"The fear is it's easier to hide stuff, but it's a similar argument to when someone's got a car wash business and their spouse comes to us and says it's all going to be in cash, 'You're never going to find it.' Well, you can have private investigators. You can count the number of cars going in. In the digital space, you would have digital experts. The court will, for example, if there's a case with assets in digital and emerging spaces, appoint experts to do a report, like you would evaluate and value a property business or a bank. These old-fashioned businesses are valued; new businesses and assets will be valued by experts.
"I think it's the fear that people have because these assets are new, and because they are challenging our conception of what assets should or shouldn't be digital money, this digital dollar. But it's just evolution, and I think the law is there to deal with it."
The modern prenup: A practical guide
To fully protect modern digital assets with a prenup, it’s essential to get this drawn up by a legal expert.Planning for a digital future
With personal wealth evolving to include digital assets and younger generations shifting their perceptions around prenups, this once derided legal agreement is quickly becoming an essential tool to plan for a digital future. It offers a traditional solution for a very modern problem. If you are considering a prenuptial agreement to protect your assets, contact our specialist family law team for a confidential consultation.
Family law solicitorsOur solicitors can support you with any issue you face, from making a pre-nuptial or post-nuptial agreements through to dealing with your finances after a divorce.
Pre-nuptial solicitorsPrenuptial agreements might not feel “romantic”. But they can protect the life you built before you met your partner in the event your marriage breaks down.
Tax advisorsWith legal specialists, tax advisors, and accountants in our team, we can help you through every stage of the tax planning process.