Pre-nupts: An Explanation

New Rules: Pre-nupts

In the past, pre-nupts were not binding because marriage was for life and a prenuptial agreement which mandated what would happen at the end of marriage was contrary to that. Also, the family court had a wide discretion when it came to financial settlements. If pre-nupts were upheld, they could be seen as ousting the jurisdiction of the court.

Currently, pre-nupts are still not binding, but they can be persuasive. In the leading case of Radmacher v Granatino, a wealthy German heiress and a French businessman signed a pre-nupt at her father’s behest to protect the family fortune. They had children and he later gave up his job as a high-earning City banker to study for a PhD, and then they divorced. In the Supreme Court, the court held that they would uphold the pre-nupt if the agreement was entered into freely, the parties had a full appreciation of the implications, and there were no vitiating factors or changing circumstances, which made it unfair to hold the parties to the agreement. In this case, the parties had signed the pre-nupt willingly and knowing the consequences, so the husband could not get a generous settlement—only his basic needs plus what he needed to take care of the children when they saw him was provided for.

The Elements

Firstly, the agreement has to be entered into freely. Independent legal advice is a way of proving that the parties had entered into the agreement freely, but if a person is sufficiently intelligent or the terms are relatively straightforward, the court may be persuaded that there was no need for legal advice. In Radmacher, the husband was a high-earning City banker and even though he didn’t get legal advice, it was held that he was sufficiently intelligent to understand the terms of the pre-nupt. Also, the timing of the pre-nupt is important as well. A pre-nupt given at the eve of the wedding ceremony may be taken as putting undue pressure on the other party.

Secondly, the parties must have a full appreciation of the implications. The parties must know the effects of the pre-nupt, which is the extent of the claims they are giving up by signing the pre-nupt. In Radmacher, the husband did not know the exact wealth of the wife but there had been a material disclosure of her assets, which was sufficient.

Thirdly, the pre-nupt must be fair. Lord Nicholls stated that fairness is the main objective in financial settlements on separation in White v White by, and pre-nupts are no different. The three Miller; McFarlane strands of needs, compensation and sharing in financial settlements will be considered. A pre-nupt which provides that the other spouse will get nothing on divorce is unfair and will not be upheld. In Luckwell v Limata, if a pre-nupt was upheld the husband would be homeless and saddled with debts, so this was unfair, but his settlement was greatly reduced only to cover his basic needs in reflection that he had willingly and knowingly signed the pre-nupt. In addition, if there are changing circumstances which makes a pre-nupt unfair, the court will consider that as well. For example, if a wife has given up her high-paying job to raise the children, then the court might consider if unfair to only provide for her basic necessities if she is the primary carer of the children. Therefore, a pre-nupt should provide for the parties’ basic needs.

Pre-nupt Checklist

Whether a court decides to uphold a pre-nuptial agreement depends on whether the circumstances are fair. However, for the maximum chance of having your pre-nupt upheld, the agreement should be drawn up by a qualified solicitor, both parties should receive independent legal advice, they must fully understand the terms, and the effects of the pre-nupt, the pre-nupt should be signed 21 days before marriage, there should be full disclosure of assets and property by both parties, and the pre-nupt should provide for the basic needs of both parties and the potential children.

Conclusion

Although pre-nupts are still not automatically binding in the UK, the court will definitely consider the agreement, and they will uphold them if they are fair and are made according to the rules.

For people who are already married, if you have not signed a pre-nupt prior to marriage, a post-nuptial agreement is treated in the exact same way, so it is not too late to create one.

 

By Olivia Chan

A Work Experience Student

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