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Pre-nuptial Agreements

What are they?

A pre-nuptial agreement (sometimes also referred to as an ‘ante-nuptial agreement’) is a written agreement entered into by a couple prior to their marriage, setting out what should happen to their property in the event that the marriage should fail and they separate or divorce. The agreement might, for example, state that each party will retain the property they own and will make no claim against the property of the other. Pre-nuptial agreements are often entered into where one party has substantial assets that they acquired prior to the marriage.

Richard Howlett - Partner

Richard Howlett - Partner

Pre-nuptial agreements are legal contracts, usually drawn up by lawyers. There are few particular requirements to be followed when a pre-nuptial agreement is drawn up, but it is generally considered that both parties should make full disclosure of their means and should have an opportunity to take legal advice before signing the agreement. It is also preferable if the agreement is entered into a reasonable time prior to the marriage, so as to reduce the possibility of a party being coerced into entering into the agreement against their will.

The legal position
Pre-nuptial agreements are common in other countries (where they are enforceable), but until recently they were not recognised by the law here, as it was considered that they undermined marriage.
However, the way in which the courts here view pre-nuptial agreements has changed in recent years. Whilst it is still the case that a term of any agreement that purports to prevent the courts from ordering a financial settlement following divorce is invalid, the other terms of the agreement will be taken into account by the divorce court.
The current position as to how they are taken into account was established in 2010 by the Supreme Court decision in the case Radmacher v Granatino. The Supreme Court held that the court should give effect to an agreement that was freely entered into by each party with a full appreciation of its implications, unless in the circumstances it would not be fair to hold the parties to the agreement. In other words, pre-nuptial agreements are still not enforceable here, as the court still retains a discretion to order a different settlement. However, agreements are taken into account, and will be given decisive weight by the court when it decides what orders to make, unless they are unfair. For further details of what kinds of financial orders the court can make on divorce, see this post.

The future
In 2009 the Law Commission began work on a project designed to review the law relating to ‘marital property agreements’, including pre-nuptial agreements. In its final report, published in 2014, the Commission recommended the introduction of “qualifying nuptial agreements”, which would enable couples to make enforceable, binding arrangements for the financial consequences of divorce.
In order for an agreement to be a “qualifying” nuptial agreement, certain procedural safeguards would have to be met, such as that they must not have been made within the 28 days immediately prior to the marriage, that both parties must have disclosed details of their means and that both parties must have received legal advice.  Qualifying agreements could not, however, be used by parties to contract out of meeting the “financial needs” of each other and of any children.
The Law Commission’s recommendation has not yet been taken up by the Government, but it is thought by many that a change to the law along these lines is likely to happen in the near future.

For legal advice contact Richard Howlett solicitor at Selachii LLP on 02077925649 or email info@selachii.co.uk

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