Family – Pre-nups

Joanna McClean talks about pre-nuptial agreements

The future of pre-nuptial agreements

Contrary to popular belief, pre-nuptial agreements are not legally recognised in England and Wales and are not enforceable by the courts under law. However, the situation could be set to change for the first time following a landmark Court of Appeal decision in the recent case of Radmacher v Granatino [2009]. In this case the parties had entered into a legally binding German pre-nuptial agreement. The Court of Appeal overturned an earlier High Court ruling which provided for the husband to receive a settlement of £5.85 million despite previously agreeing not to make any claims upon his wealthy heiress wife. The ruling sets a legal precedent as for the first time the court placed considerable weight on the agreement when deciding an appropriate settlement.

So what is a pre-nuptial agreement?

A pre-nuptial agreement is simply a contract entered into by the parties to a forthcoming marriage to decide what will become of their respective assets if the marriage fails. Technically, there is no reason why a couple couldn’t enter into a pre-nuptial agreement and amicably divide their assets in accordance with it if they divorced. Problems arise however, when one party no longer wishes to be bound by the terms of a pre-nuptial agreement, perhaps because like Mr Granatino their financial circumstances have changed for the worst since the agreement was entered into. The parties would then be forced to make an application to the court to resolve the financial dispute.

Why are pre-nuptial agreements not enforceable?

Pre-nuptial agreements do not feature in our existing matrimonial laws because, from a traditional family law perspective, future planning for a possible separation was seen to be damaging to the institution of marriage. Thus agreements which recognised the potential for a marriage to fail were void. It was also considered contrary to public policy for parties to a marriage to make agreements which prevented the court from exercising its statutory powers in relation to financial settlements.
Rather depressingly, times have changed and with two out of five marriages in England and Wales ending in divorce it is perhaps not unreasonable for couples to give thought to the possibility of the marriage going wrong. This is particularly so where:

• both parties are very wealthy;
• One party has considerably more wealth than the other;
• One or both parties has children from a previous relationship they want to provide for;
• Or where the parties are foreign nationals currently living in England/Wales who have entered into a legally recognised agreement in their home state which they seek to enforce.

There have been a number of cases over the last few years where pre-nuptial agreements have been brought before the court in an attempt to persuade it to move away from the principle of equal sharing which forms the start point in most cases. There is still no provision for pre-nuptial agreements in statute and this will remain the case until the law changes and parliament formally legislates on the subject. The Law Commission is preparing a report on the issue which is expected to be published in 2012. In the meantime, while the status of pre-nuptial agreements remains in legal limbo, the Radmacher v Granatino case has given a very strong indication that the courts want to recognise pre-nuptial agreements and will now be inclined to regard them as binding unless there are compelling reasons not to do so.

If you need more information and advice on any aspect of family law speak to an expert at MWR Solicitors today in strictest confidence. Call 01772 254201 or visit www.mwrlaw.com