What is a Prenuptial Agreement and do I Need One?

The aim of a pre-nuptial agreement is to reduce disputes on a divorce by setting out how assets are to be divided on divorce before the marriage.

The 2010 Supreme Court case of Radmacher v Granatino was pivotal for giving legal effect to a pre-nuptial agreement and shifted the balance in favour of upholding them.

Unlike in other jurisdictions such as the US and even Scotland, pre-nuptial agreements are not binding in England and Wales. Judges have a degree of freedom when deciding whether to uphold one in whole or in part.

However, the courts are heavily influenced by the existence of a properly implemented pre-nuptial agreement and view it as a demonstration of the intention of the parties.

Individuals often worry about how to introduce the topic of a pre-nuptial agreement. In our experience, it helps to make clear that its purpose is to preserve assets for future generations.

The majority of cases where pre-nuptial agreements have not been upheld in the past ten years have been where the court has felt that one or more of the factors below has not been satisfied:

1. Make it fair

The court will struggle to uphold an agreement that it considers to be unfair – for example, where one spouse would be left in a state of real need.

The agreement must provide for the financial needs of both parties and any children, even if the provision is some way below what the “benefiting party” will retain and what the court would have awarded in the absence of a pre-nuptial agreement.

2. Disclose your assets

The question of disclosure tends to be case specific. However, if there is a material lack of disclosure and information, for example a failure to provide a full summary of finances and, if requested, underlying documents and valuations, you could fall short of what a court would expect.

3. Independent legal advice

Both parties must receive independent legal advice. The court must see that the financially weaker party has a full appreciation of the implications of the agreement they are signing and what they are giving up by signing it.

4. There must be no duress

Both parties need to be seen to enter into the agreement by their own free will. The presence of any duress, fraud or misrepresentation will negate the agreement and make a judge less likely to uphold it, if challenged.

5. Make arrangements in good time

The agreement should be signed in good time before the wedding (at least 3 weeks prior to it), otherwise a party may successfully persuade a court that they were pressured into signing (see point 4 above).

6. Cater for children

A pre-nuptial agreement cannot allow a party to contract out of an obligation to maintain their children and the agreement will not be allowed to prejudice the reasonable requirements of any child.

It is therefore essential that the needs of any children are catered for in terms of the agreement or left open, to be dealt with fairly at the time the agreement is put into effect.

If you have any questions about nuptial agreements or protecting your assets on marriage or re-marriage, please contact a member of our Family Law Team.

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