Pre-nuptial Agreements

Radmacher [2010] remains one of the most important authorities relating to pre-nuptial agreements in which the Supreme Court expressly recognised prenups as enforceable under British law for the first time.

Our sister website PrenuptialAgreements.co.uk provides the latest position on the law relating to pre-nuptial agreements in the UK, and you can obtain your own pre-nuptial agreement bespokely drafted to suit your own particular circumstances and requirements at https://www.agreements.co.uk/prenups.

“Marriage is the most important contract, for ourselves and for the wider world, that most of us will make, yet men and women sign up to it on an erotic high without mentioning the terms of the contract, still less examining them.” The Sunday Times (July 11, 2004)

It used to be the case that agreements made before marriage that attempt to influence the way English divorce courts allocate assets were of little value. However recent case law indicates that England is catching up with the rest of Europe where Prenuptial Agreements have been fully binding for years. The case of K -v- K [2003] paved the way for this, and in January, 2008 the case of Crossley confirmed the vital importance of prenups in family asset preservation under English law. In the words of Lord Justice Thorpe, giving the ruling of the court:

"If ever there is to be a paradigm case in which the courts will look to the pre-nuptial agreement as not simply one of the peripheral factors of the case but a factor of magnetic importance, then it seems to me that this is such a case."

Crossley further confirmed that the court may now require a party challenging an agreement intended to regulate finances within marriage to show good cause why it should not be followed. Thus, the balance has started to tip in favour of following financial agreements regulating marriage provided they have been professionally drafted with all procedural requirements correctly adhered to, which is our priority here at Agreements Limited.

The Court of Appeal has shown that when a prenuptial agreement exists, the English courts can take a pragmatic approach and short-circuit normal court procedures, saving time, money and emotional distress for all involved, thereby allowing couples to avoid the considerable stress and heartache should the marriage break down, whilst also providing insurance against costly litigation.

A pre-nuptial agreement allows couples a degree of self-regulation over their own financial affairs without necessarily involving the state in the unfortunate event of a divorce, and this can be of enormous value in obviating the need for expensive, protracted and unpleasant disputes, since the parties will already have agreed on the distribution of their assets. This is of particular interest where there is an inequality of wealth going into the marriage, but of course the agreement must ensure fairness if the parties expect a court to enforce their private financial arrangements.

English courts have been careful to impose a variety of different safeguards in the interests of fairness, and therefore prenuptial agreements must be carefully managed throughout the drafting process to ensure that every legal requirement and safeguard is met. Downloading a DIY contract without specialist legal knowledge of every potential pitfall will put all your assets and future earnings at risk in the event of divorce. Of course any children of the marriage cannot be party to a pre-nuptial agreement, and their needs are addressed as a priority before the terms of a pre-nuptial agreement are considered.

In the case of S -v- S [1997], the court took into account the contents of a prenuptial contract between the husband and wife and, more significantly, in the watershed High Court decision of K -v- K [2003], despite the less wealthy partner challenging their prenuptial agreement, the Judge followed its financial provisions exactly as it was drafted in their prenup, thereby saving Mr. K. millions of pounds. This landmark case is also useful in setting out just some of the criteria that English courts now examine when reviewing Prenuptial Agreements:

  • Did the party with most to lose understand the agreement?
  • Did he/she have independent legal advice?
  • Was he/she under pressure to sign?
  • Was there full financial disclosure?
  • Would an injustice be done if the agreement were upheld?

    More recently, the 2006 appeals of Miller and McFarlane and the 2007 appeal of Charman clarified the judiciary’s approach to the fair distribution of matrimonial assets, and in 2006 the Law Commission published ‘The Financial Consequences of Relationship Breakdown’. Drawing on recent case law, a starting point would be the equal distribution of matrimonial assets (i.e. acquired during marriage). However a prenuptial agreement really comes into its own in protecting assets previously acquired, as well as expected future inheritances from a named source.

    The government has already considered in a consultation document the possibility of prenuptial agreements becoming fully binding in England, as they are in Europe, and the type of safeguards it felt should be put in place (e.g. it felt that an agreement should not be legally binding in relation to any children, or where the agreement is made fewer than 21 days prior to the marriage). However even the latter safeguard was not considered important in the case of K -v- K [2003] as their prenup was signed the day before the marriage.

    In a 2006 study, Heather Mahar of Harvard Law School spent the previous year trying to understand why more couples don't get prenuptial agreements. Her study, which she's submitted for publication in several journals, confirmed her suspicions: People are falsely optimistic about the success of their marriages, and they fear that requesting a prenuptial agreement would signal uncertainty about a marriage.

    Mahar found that although respondents to her survey correctly identified the national divorce rate at close to 50 percent, they believed their own chance of divorcing was just 11.7 percent. The more optimistic a respondent was about the enduring success of his or her marriage, the less likely he or she was to consider requesting a prenuptial agreement. "Just like everyone thinks they're a better-than-average driver, everyone thinks that there's no way their marriage will end in divorce," says Mahar.

     

     

     

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