Pre-nuptial agreements
John Boon

Pre-nuptial Agreements

It is a sad reality that a number of marriages end in divorce.  Whilst no one enters into a marriage expecting the worst to happen, some couples do wish to try and minimise the potential for conflict, should a divorce occur.

We are regularly contacted by individuals who are contemplating entering into a pre-nuptial agreement with their future spouse. When a party has been through a previous divorce they can be anxious to protect their financial position the second time around. Pre-nuptial agreements are also particularly useful where a party wishes to protect their business assets, or any assets which they stand to inherit in the future from family members.

A pre-nuptial agreement will regulate the financial claims arising out of the breakdown of a marriage. It should address all of the potential matrimonial issues, including the position regarding maintenance payments, division of the parties’ pension provision and also the position regarding the ownership of the matrimonial home.

What is a pre-nuptial agreement?

A pre-nuptial agreement is an agreement in writing entered into by two parties prior to their marriage, or entry into a civil partnership, which records how they wish their resources to be treated and distributed in the event that they divorce or have their civil partnership dissolved.

Is a pre-nuptial agreement legally binding?

Historically, it was contrary to public policy for married couples, or couples about to get married, to make an arrangement which provided for the contingency that they might separate. However, attitudes have changed over the years and in October 2010, the Supreme Court in the reported case of Radmacher v Granatino held that, in the case of both pre-nuptial and post-nuptial agreements:

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

Notwithstanding the Supreme Court’s ruling, pre-nuptial agreements are not binding in the sense of being enforceable contracts; nor are they permitted to prevent the court exercising its jurisdiction to make financial orders on a divorce or dissolution of a civil partnership. However, agreements which are properly entered into are now recognised by the divorce courts in England & Wales and significant weight is being given to them in any financial claims on divorce or on the dissolution of a civil partnership.  The position could change in the future and agreements of this type could become legally binding.

The requirements for a valid pre-nuptial agreement are:

  • it must be contractually valid (and be able to withstand challenge – eg on the basis of undue influence or misrepresentation);
  • it must be made by Deed and contain a signed statement from both sides that the agreement is a pre-nuptial agreement and that the Court will take account of its contents;
  • it must be entered into at least 28 days before the wedding or civil partnership (however, we recommend entering into a pre-nuptial agreement at least two to three months before the intended marriage – the sooner the better!);
  • both parties will need to make full and frank disclosure of their personal and financial circumstances before the agreement is executed and both parties must have received independent legal advice before the agreement is formed.

It goes without saying that the contents of a pre-nuptial agreement must generally be fair to both parties and meet their needs and, of course, no undue influence should be put upon either party to agree its contents.

The advantages of a pre-nuptial agreement are:

  • a pre-nuptial agreement can save time and costs in the long run;
  • they can provide financial security and certainty;
  • a pre-nuptial agreement can protect family assets or any assets acquired before the marriage takes place;
  • an agreement encourages couples to talk about their financial affairs before they marry.

If a couple has already married, then it is also possible to enter into a post-nuptial agreement regulating the financial position should their marriage break down. The requirements for a valid post-nuptial agreement are similar to those for a pre-nuptial agreement.

Once it is made, is it ‘set in stone’?

It is always a good idea to review a pre-nuptial agreement every few years to ensure that it still reflects the parties’ intentions, meets needs and remains fair.  If children have been born or circumstances change dramatically, the couple may want to review the agreement (and/or convert it into a post-nuptial agreement) to take account of the new situation they find themselves in.  A well drafted pre-nuptial agreement will contain a review clause to cover these eventualities.

What next?

If you think a pre-nuptial agreement may be suitable for you and your partner, you should discuss the general concept of it with them first.  Remember - it needs both parties to be in agreement before it can be signed.

Then call a member of our specialist Family team.  They will be happy to take you through the process, answer any questions you may have and then help to negotiate, draft and finalise the agreement.

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