Henry Brookman is the founder of Brookman Solicitors: www.brookman.co.uk
Some may see them as unromantic, cynical and a waste of time but the reality is that prenuptial agreements are more likely to be binding on parties following a recent Court of Appeal case.
It is too early to say that we can rely on all prenuptial agreements being accepted by the courts, but the pospects that a well drafted prenuptial agreement will be accepted have considerably improved.
Therefore prenuptial contracts should not be automatically dismissed when talking to your partner about your future together and protection of your financial interests.
English law has long stood apart from other countries with similar legal systems, such as France and the United States, in its refusal to give full credence to prenuptial contracts. The situation historically has been that although you can have a prenuptial agreement in England and Wales it is a matter for the Judge to decide how much weight to place on the agreement.
Factors which could influence the Judge to place greater or lesser weight on the agreement are whether both parties sought legal advice, whether there was full disclosure of each parties’ assets prior to the marriage, and whether negotiations took place well prior to a marriage taking place (so one party did not feel as though they were under duress).
That said, it was entirely open to Judges to note the existence of a prenuptial agreement, but ignore it. It was once said during an enquiry as to whether prenuptials should become binding in English law that there was “a unanimous lack of enthusiasm” about them.
Recently though there has been a decision in the Court of Appeal in relation to prenuptial contracts – Radmacher v Granatino – which seems to change the law on prenuptial agreements.
Radmacher v Granatino concerned a German wife and a French husband. The husband was a high flyer working in the city. The wife came from a family of considerable means, of which the husband was undoubtedly aware, although the full extent of the assets was never disclosed.
On 1st August 1998 the husband and wife signed a prenuptial agreement, valid under German law. They married shortly afterwards. The marriage was celebrated in both England and Switzerland.
The marriage broke down after a few years and divorce proceedings were issued in England. In the High Court Justice Baron awarded the husband a settlement of £5.6 million, despite the prenuptial agreement stating neither party would seek maintenance from the other in the event of divorce (by way of comparison the wife’s liquid assets were valued at £54,000,000 and she had shares in her family company).
The wife appealed. The appeal was successful. Despite the fact that there had been no disclosure of each parties’ assets, the husband never sought independent legal advice.
The Judges in the court of appeal made it clear that they considered that an agreement freely entered into by two individuals of their own free will should be considered a decisive factor in any financial award made in proceedings on the breakdown of the marriage. In practice this seems to mean that prenuptials are more likely to be binding on parties.
The Court of Appeal also discussed prenuptial contracts in the context of second marriages. Lord Justice Thorpe dismissed the stereotype of super-rich males seeking to protect fortunes being those who seek prenuptial agreements saying ‘There are many instances in which mature couples, perhaps each contemplating a second marriage, wish to regulate the future enjoyment of their assets and perhaps to protect the interests of the children of the earlier marriages upon dissolution of a second marriage. They may not unreasonably seek that clarity before making the commitment to a second marriage.’
He continued saying ‘Due respect for adult autonomy suggests that, subject to proper safeguards, a carefully fashioned contract should be available as an alternative to the stress, anxieties and expense of a submission to the width of the judicial discretion.’
One large exception to the strengthening of prenuptial agreements is issues relating to child maintenance and possibly to associated housing costs. A lawyer drafting a prenuptial agreement should be careful to leave issues relating to child support and accommodation to the courts, because under English law you cannot exclude the courts from dealing with those issues.
There is a serious risk that if a prenuptial contract does not take proper account of those issues, the whole contract will be struck down, rather than the court trying to give partial effect to the contract as between the adults, and making some special exceptions for the children. The lawyers need to be careful with their drafting.
Following this case parties can have much more confidence that prenuptial contracts will hold good in the future and they can no longer be dismissed as an ineffective bit of paper. The key is that individuals need good advice to help them negotiate their agreements – it is usually reasonably straight forward to meet each parties’ requests and it is also fairly easy to work out an agreement that covers the situation if they separate before they have children.
Much more difficult is the situation if the couple have children – a wife may give up work to look after the children or the couple may decide that it is not economical for her to go back to that occupation and instead she may perform a nominal work role.
It is incredibly difficult to gaze into a crystal ball and work out an arrangement that will hold good for, perhaps, decades of marriage and this is the problem with a ‘standard prenuptial’. An agreement drawn up by either the parties themselves or an inexperienced legal practitioner is likely to be deficient because it will not consider what could change over time. Pre-nuptial agreements have to think about contingencies which the parties themselves have not considered.
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