Pre-Nuptial Agreements Update

Why enter into a pre-nuptial agreement?

If you are thinking about entering into a marriage or a civil partnership you may wish to think about entering into a pre-nuptial agreement. This is a document that would be entered into by both parties prior to the marriage or civil partnership taking place. Although, in the event of a separation, pre-nuptial agreements are not completely binding upon the Courts on deciding how to divide up the finances of the couple, they are evidence of what was agreed at the time of entering into the marriage or civil partnership and therefore attempt to ensure that the parties assets remain theirs, if the marriage of civil partnership fails.

For example, one or both parties to the marriage or civil partnership may be keen to ensure that the family business remains in the family in the event of a separation or one or both parties may be keen to provide that their assets, or at least a large portion of them, go to their children, in the event of their death. A further advantage of entering into a pre-nuptial agreement is to arrange matters which may become problems if the marriage or civil partnership breaks down and, where there is substantial disparity of wealth, this disparity may be preserved in the event of a divorce or separation. Pre-nuptial agreements have been legitimate in many states of the United States of America for years and now, in many European countries for, for example, France and Germany and also, in Australia, they are not only recognised but are common place.

Pre-nuptial agreements can, for example, cover the division of all property, determine ownership of the property, arrange for a person to occupy a home and on what basis and they deal with responsibility for debts and payment of outgoings.

The attitude of the English and Welsh Courts towards pre-nuptial agreements

Although pre-nuptial agreements are not completely binding upon the Courts, the Courts are looking more and more favourably at them. Their authority to do so is found in section 25 of the Matrimonial Causes Act which requires the Court, in exercising its discretion in financial matters, to consider all of the circumstances of the case and/or the conduct of each of the parties under section 25 (2) (d), all the circumstances of the case would include therefore any pre-nuptial agreement entered into.

Indeed there has been recent case law suggesting that pre-nuptial agreements are being considered more within financial proceedings upon the breakdown of a marriage or a civil partnership. One such most recent case is the case of Radmacher v Granatino [2009] EWCA CIV 649. This was an appeal by a wife against an award in financial proceedings where the couple, both born overseas, had signed a pre-nuptial agreement in Germany however their divorce and financial proceedings were being dealt with through the English Courts.

The parties had signed a pre-nuptial agreement valid under German law but then divorce in the UK. In the High Court Baron J had awarded the husband 5.6 million pounds even though the pre-nuptial agreement had stated that neither party would seek maintenance from the other in the event of a divorce. The wife therefore appealed on that basis.

Given the lead Judgement Thorpe LJ allowed the appeal broadly on the grounds that Baron J, the previous Judge, had not given sufficient weight to the existence of the pre-nuptial agreement in her initial award, though still providing the husband with some housing and other funds to reflect the shared residence of the couples’ children. At paragraph 53 of the Judgement he also made the following statement: -

“In future cases broadly in line with the present case on the facts, the Judge should give due weight to the marital property regime into which the parties freely entered. This is not to apply foreign law, nor is it give effect to a contract foreign to English tradition however it is in my Judgement a legitimate exercise of the very wide discretion that is conferred to the Judges to achieve fairness to the parties to the ancillary relief proceedings”

The other two Judges in the appeal also added Judgement in support of the overall conclusions and therefore this case outlined that pre-nuptial agreements entered into prior to the marriage, whether it be in this country or in a different country, should be given weight to if financial matters are dealt with through the Courts of England and Wales.

As outlined above, decisive weight must be given to the parties pre-nuptial agreement throughout financial proceedings.

Summary

The Court must therefore consider “all the circumstances of the particular case” which can include a pre-nuptial agreement and as a result, pre-nuptial agreements are being taken into account more in financial proceedings. The Court’s first consideration is to the welfare of any child of the family whilst under the age of 18 however. The Courts duty is to achieve fairness of all the circumstances of the case. Much does depend on the individual facts of each case, with the Court coming to its decision on the facts as they are at the Court hearing and although there may have been a significant change in circumstances, since the parties signed the pre-nuptial agreement, which may militate against enforcing it, pre-nuptial agreements must be taken into account in the event of a separation.

The Future

In the future it is likely that pre-nuptial agreements will continue to be taken into account within financial proceedings upon separation and indeed are expected to become more common place in society. Indeed in 1999 the Government issued a Green Paper “Supporting Families”, promoting pre-nuptial agreements and suggesting legislation which could make them binding and although no such legislation has yet been put into place, there have been various recent cases dealing with pre-nuptial agreements and promoting their significance within family proceedings.

What do I do if I am thinking about entering into a pre-nuptial agreement?

If you are thinking about entering into a pre-nuptial agreement, one of our family law specialists here at Pritchard Joyce & Hinds will be able to help you with this. At PJH solicitors we have the necessary expertise and have successfully advised clients in this area. If you need assistance or indeed wish to make an appointment to discuss pre-nuptial agreements further, please contact Sally Hartwell, Partner on 020 8658 3922 or by e-mail at s.hartwell@pj-h.co.uk

Sally Hartwell will be able to answer any queries and provide more in depth advice as to the process of entering into a pre-nuptial agreement together with an estimate of costs for dealing with that on your behalf.