family & private. pre-nuptial Agreements - it pays to think ahead

Like it or not when a couple get married, they should consider what may happen in the future. In the unfortunate event that they fall out with each other, and there is a separation, it may be necessary for the parties to protect their assets, particularly if there are assets and wealth which has been acquired by one party prior to the marriage. There are many situations where this may be important, for example where mature couples contemplating a second marriage wish to protect the interests of children of their earlier marriages. It is in our experience far easier to do this before the marriage than after there has been a breakdown.

Historically, pre-nuptial agreements have not been enforceable under English law and Courts have generally aimed for a 50/50 split of the assets, unless there are compelling reasons to do otherwise.

On 20th October 2010, the Supreme Court handed down a decision which will influence all future divorces involving pre-nuptial agreements.

In the case of Radmacher v Granatino, a German heiress persuaded the Supreme Court on appeal from the Court of Appeal, to take into account the terms of a pre-nuptial agreement. This cut her husband's potential award due to their agreement stating that her husband would not make a claim to her fortune should they divorce. A large consideration in this case was the fact that both parties came from countries where pre-nuptials are upheld, even though they were married, and divorced, in England.

This ruling has brought English law into line with European law which does place weight on pre-nuptial agreements. Although this does not yet mean that pre-nuptial agreements are binding in English law (the Justices have stated that parliamentary legislation will be required to do this), this ruling has strengthened the enforceability of pre-nuptial contracts in the English courts.

The Law Commission is currently reviewing legislation on this area of the law, but no definitive changes are likely to take place prior to September 2012. In the meantime, it is now clear that courts will take into account agreements which were freely entered into by each party.

The validity of the pre-nuptial contract will be affected by factors such as whether there are children of the marriage, whether the parties obtained independent legal advice, whether there was undue influence, whether there has been an unforeseen change in circumstances and whether the agreement is, in all the circumstances, fair. Ultimately, the decision as to the division of the matrimonial assets still remains with the courts.

Published - January 2011

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