Many more couples are considering pre-nuptial agreements, in part because the average age at which people marry is nearly 36 years for women and 38 years for men according to the Office of National Statics. Individuals in their mid to late thirties have often acquired substantial assets, many of whom own a property or have inherited substantial sums of money from their older relatives and wish to protect their assets. Prenuptial agreements are no longer only the province of the extremely wealthy. On the face of it, this seems to be a wise precaution.
Daniel Theron, a partner, points out "a pre-nuptial agreement should be considered carefully with the advice of a family lawyer. Every circumstance is different and the agreement should be tailored to the particular needs of the engaged couple." He further commented "it is highly unlikely that any one couple would have exactly the same requirements as another. It would therefore be extremely unwise to rely on a document downloaded from the internet or attempt to draft an agreement yourselves. "
Unlike Europe and Scotland, the enforcement of pre-nuptial agreements is not regulated by law in England and Wales. However, the landmark ruling by the Supreme Court in the case of Radmacher –v- Granatino in 2010 has transformed the attitude of the courts in England and Wales from dismissive to having "decisive weight" provided the pre-nuptial agreement was "fairly contracted".
Daniel Theron explains "the case of Radmacher –v- Granatino has been well documented and involved a couple where the financial assets of the husband and wife were not similar, the wife, Ms. Radmacher, having a considerable inheritance whereas her husband, Mr Granatino, did not. At the behest of Ms. Radmacher's father a pre-nuptial agreement was drawn up to protect his daughter's inheritance. During the course of the marriage Mr. Granatino left a lucrative job to work at Oxford University to pursue an academic career at a considerably reduced salary of £30,000. Following the breakdown of the marriage Mr. Granatino asked for financial relief and the High Court awarded a total of £5,560,000 as income for life, and other considerations in connection with his parental status. The prenuptial agreement was disregarded. Ms. Radmacher successfully appealed the decision, acknowledging Mr. Granatino's requests related to parental access but denying that he should be supported for life out of her inheritance and challenging whether he should be able to renege on the pre-nuptial agreement. Mr. Granatino attempted to overturn the decision by appealing to the Supreme Court which was dismissed. The Supreme Court qualified its ruling stating that both pre and post-nuptial agreements have 'magnetic importance' and unless it can be demonstrated that they are unfair in either how they were created of the effect that they would have the agreement should be adhered to."
Following this ground breaking decision the Law Commission (an independent body) conducted a review of Marital Property Agreements and published a report in 2014 with the recommendations that "qualifying nuptial agreements" should be introduced as enforceable contracts enabling couples to make obligatory binding arrangements. By "qualifying nuptial arrangements" the Law Commission implies that the agreement must follow these rules:
- The agreement must be seen to be fair – with the circumstances of both parties reviewed at the time of the divorce.
- The agreement must have been freely entered into and must be signed at least 28 days prior to the marriage.
- The agreement must be fully understood by both parties following independent legal advice or the opportunity to obtain such advice was offered.
- The agreement must have full financial disclosure provided by both parties.
In 2017 the Government said that it is still considering the Law Commission's report and recommendations.
A court considers financial needs of both parties when deciding on the way the assets of the marriage are to be divided in the event of divorce and will not leave one party without the ability to obtain housing if adhering to the pre-nuptial agreement would cause this. Therefore, a pre-nuptial agreement could and should be forward-thinking and account for a range of possible circumstances through a variety of clauses. This should consider whether the terms of the pre-nuptial agreement may lead to unfairness if either party suffered a change in financial circumstances. The agreement could make provision for the financially weaker party to receive either a loan or a property from the assets of the marriage to meet their housing needs. The other party would retain a beneficial interest in the assets in accordance with the original terms of the pre-nuptial agreement on death or re-marriage of the recipient.
The generosity of the law England and Wales compared with other jurisdictions when awarding provision to financially weaker parties is widely recognised. The court, when considering the function of a pre-nuptial agreement in a financial claim on divorce, it applies the Matrimonial Causes Act 1973 section 25 which is the legislation applicable and obliges the court to review all relevant factors. The starting point of the court is a 50/50 division of marital assets. The recent changes in this area may allow more financially stronger parties to benefit from a prenuptial agreement, therefore it would be in the financial weaker parties' interests to seek appropriate independent legal advice.
The law in England and Wales relating to prenuptial agreements lags behind other countries, where it is more common to draft pre-nuptial agreements due to the usual starting position of the court. A prenuptial agreement can create open and structured discussion on finances and can help show parties true intentions before entering into marriages, whether that be for love or otherwise. However, the law cannot be overruled by the terms of a pre-nuptial agreement between the parties nor can a judge be prevented from making a decision regarding the division of marital assets. The law allows a spouse to apply to the court for financial provision regardless of the terms of a prenuptial agreement and any attempt at renunciation of the right to apply to the court will fail.
The experienced lawyers in Giambrone's family law team try to focus on fair and equitable arrangements in a pre-nuptial or post-nuptial agreement and aim to protect a variety of assets. Fairness is the fundamental platform for a prenuptial agreement and of course, if there are children involved their welfare is paramount.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.