Prenuptial Agreements

_MG_5336These are becoming increasingly popular. They can be a good idea, but are not right for every couple.

What is a Prenuptial Agreement?

It is an agreement between a couple, entered into before marriage, which intends to regulate what is to happen about property and finances if they separate.

Prenuptial (or ante-nuptial) agreements and post-nuptial agreements and a pre- and post-civil partnership contracts and Separation Agreements

These are all types of contracts between couples. Collectively we can refer to them as Nuptial Agreements.

They can also be entered into after a wedding or before or after a civil partnership. They can in the case of separation agreements be entered into after separation.

All are trying to do the same thing: this is to regulate what is to happen about property and finances of the couple after separation.

Are Prenuptial Agreements and other Nuptial Agreements enforceable?

The Law of Divorce means that any agreement between the couple is not binding until it has been approved by a Court. The Court has discretion and the Judge needs to be satisfied that the agreement is reasonable.

The Court has a wide discretion and this is deliberate, in order to ensure that the weaker of the couple is protected from unfairness. The Court will also wish to ensure that the needs of any minor children are also met. This said the Court is increasingly unlikely to disallow an agreement which has been reached in a fair way and where the implementation of the Agreement in full would lead to an outcome which it would not be fair to hold the couple to.

Lord Philips of the Supreme Court explained in 2010 in the case of Radmacher (formerly Granatino) v Granatino:

 ‘The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement’.

What needs to happen when the Agreement is entered into for a Prenuptial Agreements or other Nuptial Agreement to be enforceable?

In a nutshell, the couple need to show;

1. The contracts were entered into freely and voluntarily;

2. Both parties had the benefit of independent, competent legal advice; and

3. Full disclosure was made of all relevant, financial and other circumstances.

What the Court will look at when it is asked to approve the terms of the Agreement

The Supreme Court said there were also three issues that needed to be considered by the Court when deciding whether to give effect to a Prenuptial Agreement/Nuptial Agreement

 

  1. Were there circumstances attending the making of the agreement which should detract from the weight which should be accorded to it?
  2. Did the foreign elements of the case enhance the weight that should be accorded to the agreement?
  3. Did the circumstances prevailing at the time the court made its order make it fair or just to depart from the agreement?

So far as point 3 is concerned a significant event such as the birth of children in the relationship may supersede the agreement.

The Court would also be interested to know if one or both of the couple were from a country where such agreements are more common than in this country.

Can you cut corners?

If you try to cut corners, you will not find out if you have succeeded until it is too late.

If a Pre-Nup/Prenuptial agreement is right for you, it is worth investing the the time to get it done properly in order to ensure enforceability.

You could save a few hundred pounds now and it could cost you thousands, even hundreds of thousands of pounds later.

Is it better to build a house of straw or a house of bricks?

So who are Pre-Nups for?

In theory anyone might benefit from having a Prenuptial Agreement. We would particularly suggest older couples, perhaps entering into a second marriage, where one or both have children and where one or both have assets of some value.

They are not romantic, but they are pragmatic and realistic. Going into a marriage with open eyes does not mean that that the marriage is being undermined. You could argue, that by having serious discussions about money in advance of a wedding will mean that a couple have a better sense of the strength of their relationship and better understanding of each other’s attitudes toward money. Perhaps those are ingredients for a more durable and successful union?

The Law Commission on Prenuptial Agreements

In the spring of 2014 the Law Commission reported on the subject of Prenuptial Agreements.  No changes to the current law have been made as yet. The essence of what was proposed was a clearer system which might encourage greater use. However the need to do go through an open process to allow both of the couple to make informed decisions with Legal Advice and disclosure remain key.