Until a few years ago lawyers advised their clients that there was no point in drawing up pre-nuptial agreements as the Courts would not be bound by them. That situation has been changing over recent years possibly initially as a result of the influence of pre-marital agreements for couples who married in Europe, USA or South Africa but who have settled in the U.K. and seek a divorce here.

 

When dividing family assets and incomes the Divorce Court is required to consider a number of factors: the needs of children take priority so they must wherever possible be provided for at an appropriate level; this inevitably means the financial settlement must meet the housing and other needs of the parent with primary care. The court also has to consider a range of issues: what the parties need; how they can meet those needs from their own resources, the standard of living enjoyed prior to the break up of the marriage; the contributions made by the parties and any change in circumstances or specific losses which will arise as a result of the break-up of the marriage and equality wherever possible. In exceptional cases the court should also consider conduct. The court should also consider all the circumstances of the case.

 

Previously the accepted view was that as the court had to be guided by these issues the parties could not oust the jurisdiction of the court by settling their own arrangements in advance of the marriage.

 

More recently the courts have been prepared to use a provision which allows them to consider all the circumstances and in that context to take account of agreements which the parties had made between themselves; in addition to the matters referred to above.

 

In 2010 the Supreme Court made a radical decision in relation to prenuptial agreements in the case of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42 when the Court decided that effect should be given to a nuptial agreement which 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.

 

This guidance is open to a great deal of interpretation but it now appears to be generally accepted that where parties enter into a nuptial agreement, that is either a pre or post nuptial agreement, provided:

 

a.         they each received independent legal advice;

b.         they were frank with each other about the relevant circumstances (for  example providing disclosure of their true financial situations);

c.         they were both legally competent to enter into the agreement at the      time;

d.         they were not under any duress to enter into the agreement; and

e.         it would not cause unfairness to hold them to their agreement

 

it will be extremely difficult to have the agreement re-opened or set aside.

 

In fact in the Granatino case the husband had not been legally advised about the terms of the agreement prior to signing it and in that case the Court’s decision slightly varied the effect of the pre-nuptial agreement.

 

It is an agreement entered into in advance of a marriage (preferably at least 3 months prior to the wedding date to avoid suggestions of undue influence) which sets out the arrangements which the parties intend to make. It can outline arrangements for living together during the marriage but usually sets out the division of assets and income in the event that the marriage fails. 

 

Sometimes parties enter into a similar agreement after the marriage – a post nuptial agreement.

You may feel that it is a rather unromantic arrangement but it is sadly the case that something like one in three marriages fail; and there are many couples who live together rather than marrying because they do not want to be subject to the jurisdiction of the court in the event of a separation. A pre-nuptial arrangement enables couples to maintain more control over their future. Some couples feel that it removes the distractions caused by disparities in capital and income and enables the couple to focus on their relationship.

 

 

Who should consider entering into a pre-nuptial agreement?

Typically where one party to the marriage has a greater capital or income base than the other he or she may wish to protect their position in the event of a separation given that a spouse may otherwise have a claim on at least 50% of the available assets or more if they can establish a need.

So this might include those entering into second marriages; people who are no longer young and have built up a financial base before meeting their fiancée; where there is a significant disparity in income or capital; where there are financial responsibilities to others such as children, possibly adult children, of a previous relationship; or where one party has significant inheritance prospects maybe some considerable time in the future.

Of course young engaged couples might also wish to ensure that they have a clear agreement for the future in case the statistics on divorce catch up with them; it might help them to avoid the potentially lengthy and expensive litigation which often accompanies divorce.

For such an agreement to be effective it is important that both parties understand the real meaning of the agreement, that is, not only what they are entering into but what they are giving up by signing the agreement; for that reason it is important that each party is legally advised before signing the agreement.

At Neves we frequently draft nuptial agreements for our clients and advise on the effect of such agreements when a marriage fails. If you are thinking of marrying why not have a chat with a member of our family team who can advise you as to whether such an agreement will be right for you.

For more information contact our team.