Pre-nuptial agreements and pre-marital agreements are widely known as agreements entered into prior to marriage or a civil union.
Due to divorce rates, the number of re-marriages and the ability to marry a number of times and with people living longer, pre-nuptial agreements or pre-marital agreements as they are now to be known, are increasingly popular. That popularity has increased due to the decision of the Supreme Court in the case of Radmacher -V- Granatino.
By a majority decision of the Supreme Court some clarity to the approach taken by the English Family Court has been provided for. The decision in this case holds the husband to a pre-marital contract he had signed before marriage to his wealthy wife. The contract provided that the husband would not be able to make any financial claims on divorce, and such agreement was to be binding on the parties in Germany where the wife is from and the contract was drafted, and France, where the husband was from.
The Supreme Court’s decision was an appeal by the husband from the Court of Appeal. His decision was upheld, holding him to the terms of the agreement that he had signed, save for some financial provision to enable him to facilitate his responsibilities as a father. The Court declared that Courts should “give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.
As a result of this now considered fundamental, principle set out in the Judgment of this case, consideration should be given to the following:
- Are there any circumstances surrounding the making and execution of the agreement which would lessen the weight which should be attached to the agreement which would justify asking the Court to depart from its terms?
- The agreement must be voluntary, i.e. both parties must have wanted to agree to its terms without pressure from any source or party.
- Both parties must be informed of the implications of the agreement such that they seek legal advice. A refusal to take the opportunity to take legal advice is unlikely to justify a departure from the terms of the agreement. The parties should disclose their financial position to each other.
In addition the Supreme Court removed the distinction between pre-nuptial agreements and post-nuptial agreements. It remains, however, the position that nuptial agreements either pre or post are not binding on the English Divorce Court. The Court will continue to retain the ultimate jurisdiction to determine financial positions on divorce. It does, however, seem that the burden will now be on the person seeking to get out of such an agreement and to justify where they should not be held to its term if properly entered into. The Court will look at the effect of the agreement on the parties, and will not uphold an agreement which results in one party being left a real need.
Who will benefit from entering into pre-nuptial agreements? It is thought that those who wish to protect inherited wealth, pre-marital assets or provide specifically for their children from a previous marriage, will benefit most from these agreements and, indeed, the decision of the Supreme Court.
Like anything in life, situations change; a pre-nuptial agreement entered into before marriage should be reviewed, renewed or varied after marriage. Post-nuptial agreements are agreements made between husband and wife after marriage which govern their financial affairs, to be made by a couple who intend to stay together or by a couple who intend to separate.
For further information and assistance in drafting pre-nuptial agreements or post-nuptial agreements or advising on the effects of a proposed pre-nuptial or post-nuptial please contact Olive McCarthy or Karen Johnson at our Hertford office on 01992 558411.