Reasons to choose Wilson Browne
With weddings limited to small groups, anyone postponing their wedding could use it as an opportunity to consider putting a pre-nuptial agreement in place prior to the marriage.
What is a pre-nuptial agreement?
In basic terms, it is an agreement setting out how finances would be divided in the event of a later divorce. A pre-nuptial agreement is one that is put in place at some point prior to the marriage as opposed to a post-nuptial agreement, which is entered into at some point after the marriage. Some couples will choose to enter into a pre-nuptial agreement prior to the marriage and for completeness, enter into a post-nuptial agreement after the marriage.
Why enter into a pre-nuptial agreement?
There are numerous reasons some couples may choose to enter into such an agreement. They commonly include:
- One party has substantially greater capital or income than the other
- One or both parties wish to protect assets owned prior to the marriage
- It would be beneficial to define what is considered to be ‘matrimonial property’ or ‘non-matrimonial property’, for example, business assets or inheritance
- One or both parties has children from a previous marriage or relationship and wishes to protect assets for the purpose of inheritance planning
- One or both parties has a connection with, or property in, another jurisdiction
Are they binding?
In England and Wales, pre-nuptial agreements are not strictly binding in the event of a later divorce, but the terms of a post-nuptial agreement may be decisive in the event of a dispute dealt with by the court unless the effect of the agreement would be unfair.
The leading case on pre/post-nuptial agreements is Radmacher v Granatino. The brief facts of the case are as follows. The wife was a German heiress to a large fortune in the paper industry, and her French husband was a banker. The parties married in London in 1998, having signed a pre-nuptial agreement in Germany three months previously. They agreed that neither party would benefit from the property of the other on divorce. When they later divorced, the Supreme Court held that the pre-nuptial agreement was legally enforceable. This changed hundreds of years of law in England and Wales as previous to this case, such agreements were seen as contrary to public policy. The position now, as clarified in the judgment, is that the “court should 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 prevailing it would not be fair to hold the parties to their agreement”.
Therefore, while it is not possible to have a fully binding pre-nuptial agreement, if the following steps are taken, the court is far more likely to deem an agreement fair and uphold it in the event of a dispute.
- Both parties having independent legal advice.
- Full financial disclosure.
- No unfair terms
- No pressure of undue influence.
- No fraud or misrepresentation.
- Legal contractual requirements are followed.
Impact of any children to the marriage after a pre-nuptial agreement
A pre-nuptial agreement cannot prejudice the interests of any children of the family. It is usual to build in provision for a review of the agreement so that if you have children, their needs can be considered and assessed at that time, and the agreement amended accordingly.
In financial proceedings, the court’s paramount consideration is always the needs of any children of the family. If the court considers any agreement would adversely affect the children, it is likely to consider that it is unfair to uphold the agreement in the circumstances. For example, it is not possible to agree to not provide maintenance to support a child of the family.
Financial proceedings on divorce are often very stressful and costly for those involved. This can particularly be the case where there are children to the marriage. The family court has a wide discretion on divorce. Different judges could be provided with the same set of facts and reach completely different conclusions as to what a fair settlement would be. Pre-nuptial agreements provide some certainty to couples providing the steps discussed above are followed.
The Family team at Wilson Browne has many years of experience in drafting pre-nuptial agreements to give clients the best protection possible. In addition, we have assisted clients who may have entered into unfair agreements without legal advice and wish to challenge them.