Pre‐Nuptial Agreement Information

Pre‐Nuptial Agreement Information

This article sets out the position relating to pre-nuptial agreements and how they are viewed by the courts on divorce. If you have any questions please contact Holly Berner (hb@woodfords.co.uk) or Rajan Berry (rb@woodfords.co.uk)

Summary of the Law upon a financial order claim

The starting point for the courts in a financial order claim is that the matrimonial assets are divided 50/50. The courts must then give first consideration to the welfare of any child/children of the family under 18 and have regard to all the circumstances of the case, including:

  1. The income, earning capacity, property and financial resources that each party has or is likely to have in the foreseeable future, including earning capacity
  2. The financial needs, obligations and responsibilities that each party has or is likely to have in the foreseeable future
  3. Standard of living enjoyed by the family
  4. Age of each party and duration of the marriage
  5. Any physical or mental disability of either party
  6. The contributions that each has made to the welfare of the family
  7. Conduct of the parties, if it would be inequitable to disregard it
  8. The value of any benefit that, by reason of the divorce, the party will lose the chance of acquiring.

The court has the power to make a wide range of orders including the sale or transfer property, the payment of lump sums or maintenance payments, orders in relation to pensions, etc.

This is a brief overview of the factors considered in a financial claim, and each case will depend on the specific circumstances of that case.

In entering into a pre‐nuptial agreement, you are agreeing to regulate your financial position in the event that your marriage ends. A pre‐nuptial agreement is unlikely to be upheld if it would leave one party or any child of the family without provision for financial needs.

What is a pre‐nuptial agreement?

A pre‐nuptial agreement is a contract between parties that seeks to regulate their affairs in the event that the relationship ends.

A pre‐nup is a bespoke document drawn up for the two of you for your particular circumstances, so it can cover almost anything you want it to. There are certain things that couples usually think about when deciding how they would want to work things out if the marriage does not work:

  • What would happen to property either of you brought into the marriage?
  • What would happen to the family home?
  • What would happen to any property given to you or inherited during the marriage or any income or assets derived from trusts?
  • What would happen to money held in joint accounts and any property purchased jointly?
  • What would happen to any saved money earned during the marriage?
  • What would happen to your pensions?
  • How would you deal with any debts?
  • Would either of you pay or receive any maintenance and, if so, for how long?
  • What kinds of events might require the agreement to be reviewed?
  • What kinds of arrangements would you like to make for any children you have or are likely to have, both in financial and in practical terms?

Are pre‐nuptial agreements legally binding?

Pre‐nuptial agreements are not formally binding in England and Wales; however, following the Supreme Court decision in Radmacher v Granatino, pre‐nups are now regarded by courts as persuasive and even decisive, and may influence the outcome of an application for a financial order.

The case of Radmacher v Granatino set down that, provided each person had a full appreciation of the implications of the agreement, the court should give effect to nuptial agreements unless it would not be fair to hold parties to their agreement. So, pre‐nuptial agreements have acquired a status as close to binding as can be achieved without legislation.

The Law Commission issued a report on matrimonial property, needs and agreements, which set out various recommendations and proposals to give pre‐nups legal standing by introducing legislation for “qualifying nuptial agreements”. The recommendation if that an agreement can only be a qualifying nuptial agreement if it meets certain requirements as to its formation, including:

  1. It must be a valid contract – a contract made as a result of undue influence is voidable
  2. It must be a deed
  3. It must contain a statement signed by both parties stating that they understand the agreement is a pre‐nuptial agreement and that it will remove the court’s discretion to make financial orders, save in so far as the agreement would leave either party without provision for financial needs
  4. It should be made at least 28 days before the wedding
  5. Both parties must have received financial disclosure from the other party
  6. Both parties must have received legal advice at the time the agreement is formed

Financial disclosure and independent legal advice

The courts will generally give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances it would not be fair to hold the parties to their agreement. Agreements are generally less likely to be considered to be unfair if they are recent or if circumstances have not changed since, and if both people knew exactly what they were getting into when the agreement was made, both legally and financially, without any undue pressure being applied.

In order to do the best job of ensuring that the court will not consider the agreement to be unfair if it is necessary to rely on it, both you and your fiancé will need to set out your financial circumstances in full and take independent legal advice on the agreement and its effects. Therefore, your fiancé should obtain separate legal advice.

It is good practice to get the agreement finalised in good time before the wedding so that neither or you feels undue pressure to agree to anything. We would say at least 4 weeks.

Pre‐nuptial agreements and the interests of any children

A pre‐nup cannot prejudice the interests of any children in your family. It is usual to build in provision for a review of the agreement if and when you have children, so that the children’s needs can be considered and assessed at that time, with possible changes made to any expectations of the adults.

In the event of a divorce, if the court is asked to intervene in financial arrangements its first consideration is always the children involved. If the court considers that any agreement of the adults may adversely affect their children, e.g. by restricting any expectations of a lifestyle they would otherwise have had, it is likely to consider that it is not fair to uphold the agreement in the circumstances. It is not possible to contract out of giving financial support to or for a child.