Pre-nuptial Agreements. The Coming Thing.
The simple question is, can you enter into an agreement before you marry that binds the husband and wife on a division of their assets if they later divorce?
The simple answer, which is typical of a lawyer, is no and yes! Unfortunately, it is complicated.
The basic law is easy and it says that on divorce the British Courts will not be bound by any agreement. They are free to decide a settlement in terms different from the Pre-Nuptial Agreement.
However, there has been a major shift in the attitude of the Courts in the last 20 years from a position where a Pre-Nuptial Agreement was simply ignored, to a position now where even though not binding, they can have a significant impact on how the Judge decides the case. In a case last year an eminent Judge in the field said;
“for many years, agreements between spouses were considered void for public policy reasons, but this is no longer the case. In fact over the years, Pre-Nuptial ‘Contracts’ have become increasingly common place and are, I expect, much more likely to be accepted by these Courts as governing what should occur between the parties when a perceptive marriage comes to an end. That is, of course, subject to discretion of the Court and the application of a test of fairness.”
In another case before the Court of Appeal in December 2007 the Judges emphasised the importance of a Pre-Nuptial Agreement by saying there should be an early hearing of the issue of whether the agreement in question was a knock out blow to any additional claim by the wife. This was against a background where there was a developing view that such agreements were growing in importance.
So the next question is, what is to be done to have the best chance of persuading the Court to take a Pre-Nuptial Agreement into account?
You need to ensure:-
- Both individuals have independent legal advice.
- Both individuals provide to the other full details of their income and assets.
- The Agreement is in writing and signed by both individuals.
- That there was no undue pressure used to persuade one, or the other, to sign the agreement.
- The Court will consider it is a broadly far settlement, bearing in mind the needs of the husband, wife and any children involved.
The first 3 factors are straightforward and need no explanation. Factor 4 covers the situation where someone produced the document the day before the wedding, when the venue is booked, guests invited, wedding dress has been fitted etc. and says sign here, or it is off. On this point I advise it should be signed at least 3 to 4 weeks before the big day.
The last point about the Courts view is more difficult to define, although the extremes are easy. If say the husband has lots of assets and the wife none, if the agreement states she is to receive £1.00 in a divorce this is likely to be overturned. However, beyond this it is dependent on each case and it is best to get advice.
To conclude, if you have assets what should you do if you are considering marrying?
Firstly, I would definitely consider a Pre-Nuptial Agreement. If you get it right you could have a significant effect on what the Court might otherwise order in a later divorce. Even if not perfect and the Court take a different view, it is still likely to have some influence in your favour on the settlement.
This area is undeveloped and the mood seems to be more in favour of Pre-Nuptial Agreements. Therefore, it is quite possible a legislation could be produced in the next few years making them binding.
Also as an aside, I have found in a number of cases I have been involved in, the response of your future husband and wife when the subject is raised also tells you a lot of what you are in for!
Finally, of course, you can see from the above summary it is not straightforward. To make it likely to be enforced considerable thought needs to go into the terms of the agreement so good legal advice is required.
For more information or advice, contact Mark Chanter or click on the Enquiry button below
Friday, 11 January 2008
