When a couple get married, they need to think about the possible scenarios the future might hold. In the unfortunate event of a separation, it may be necessary to protect assets.
This is not just relevant for the rich. There are many instances in which this would be necessary, for example where mature couples contemplating a second marriage wish to protect the interests of children from previous marriages. It is a practicality that couples need to consider what will happen if the marriage does not last.
In July 2009, there was a landmark ruling by the Court of Appeal which has the possibility of influencing all future court decisions relating to marriages with pre-nuptial agreements. Prior to this ruling, pre-nuptial agreements were not enforceable in English law and the Courts have generally aimed for 50/50 split of any assets, unless there are compelling reasons to do otherwise.
In the case of Radmacher v Granatino, a German heiress successfully appealed against a High Court decision not to uphold the pre-nuptial contract in which her husband had agreed not to make a claim to her fortune should they divorce. The Court of Appeal ruled that the pre-nuptial agreement the parties had entered into before their marriage was binding. A large factor in this case was the fact that both parties came from countries where pre-nuptials are upheld, even though they were married in England.
This ruling brought English law into line with European law, which does place weight on pre-nuptial agreements. Although this does not yet mean that pre-nups will always be binding in English law, this ruling has generally strengthened the enforceability of pre-nuptial contracts in the UK courts. The case is likely to be challenged by the husband in the House of Lords, the highest Court in the land. If they uphold this ruling, then it will change the future of divorce law, and pre-nups will be binding unless there is a reason not to rely on them.
The Law Commission is currently reviewing the law on pre-nups, though no definitive changes are likely to take place prior to September 2012. In the meantime, it is clear that Courts will now place more weight on pre-nups than previously, as they now have the backing of the ruling of the Court of Appeal.
However, any validity of the pre-nuptial contract will still be affected by factors such as the length of the marriage; whether there are children and whether the parties obtained independent legal advice.
It is clear that it is now more important than ever to consider entering a pre-nuptial agreement prior to getting married, however unromantic the notion is. It is important to consider the possibility that things may not work out. It should be treated as an insurance policy, the same as taking out any other insurance when considering the possibility of future risk.
Published - July 2009
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