Pre-Nuptial Agreements

Divorce and Family Law

The Divorce Lawyer says...

"With this ring (and with the benefit of this Pre-Nuptial Agreement) I thee wed..."

Unromantic? Certainly. Sensible? Possibly.

What is a Pre-Nuptial Agreement?

A Pre-Nuptial Agreement is an agreement in writing made either before marriage or during a marriage in contemption of separation.

What is the purpose of a Pre-Nuptial Agreement?

There are many circumstances in which people who are thinking of getting married might wish to contemplate a Pre-Nuptial Agreement. For example:

  • Where one or both parties have been previously married and they wish their assets to go to their children rather than the other spouse
  • When one party brings into a marriage substantially more than the other
  • Where both parties bring into a marriage substantial assets which they wish to keep separate.

Is a Pre-Nuptial Agreement enforceable?

It looks like pre-nuptial agreements are to become legally binding allowing couples to ring-fence certain property or gifts to prevent them being shared with their partner as The Law Commission is set to publish a draft bill which is likely to receive cross party political support.   

It is hoped that the proposals will provide clarity in this area of law which is currently governed by the decision in Radmacher v Granatino (October 2010); a court will uphold a pre-nuptial agreement that is freely entered into by both parties with a full appreciation of its implications, unless in the circumstances it would not be fair to uphold the agreement. 

There are positives and negatives of pre-nuptial agreements:-   

Positives:

  • The parties can make it clear in advance what property is to be available to be shared in the event of divorce.
  • Parties can protect their assets, for example, inherited wealth or gifts received from a third party can be ring-fenced, keeping the pot terrier in the family need no longer be a struggle!     
  • It can reduce the uncertainty, time and stress of later contested financial proceedings.
  • It can provide some protection from debt i.e. a party comes into the marriage or subsequently falls into debt, a nuptial agreement can be used to protect the other parties assets from being utilised to settle that party’s debts.     
  • It can provide some protection for businesses for example, if one partner has an interest in a family business or a small private business, a nuptial agreement can protect that interest and prevent disruption to the business on the future breakdown of the marriage.   

Negatives:

  • It may penalise an economically weaker party for example, if non matrimonial property grows significantly over time, will the economically weaker party be giving up a share of a much greater sum than originally expected.  Although, it is envisaged there will be safeguarding provisions within any draft bill proposed by The Law Commission.   
  • A nuptial agreement cannot predict what will happen in the future, however a review clause contained within the same can help to maximise the chance of a court upholding the terms.  This can however mean that more fees will be incurred in the future on any review date.         
  • Whilst practical on the surface, it is unromantic, it is not a bunch of flowers or a love letter!   It can often reflect parental wishes as opposed to the couples wishes with improper pressure so that a party feels they have no choice but to enter into the agreement which may impact upon the validity of the agreement.       

It remains to be seen if we will now see a rise in pre-nups making them common place like in the US (Michael Douglas and Catherine Zeta Jones reportedly had one) but legislation will at least solidify the legal status of pre-nups which will hopefully lessen matrimonial disputes and costs arising out of them with 118,000 divorces in 2011.  

Any clarity in this area is likely to be beneficial to the parties although courts retain the power to interpret legislation and to adjudicate each case on its facts.

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