In recent weeks, high-profile separations have once again pushed prenuptial agreements, or pre-nups, into the spotlight.
From the reported divorce of Nicole Kidman to the recent disclosure of the financial settlement between Jessica Alba and Cash Warren, we are reminded of the importance of putting financial protections in place before a marriage begins.
While headlines tend to focus on the intricate and invasive details of who gets what and how assets are divided, they rarely address the legal mechanisms behind the scenes.
This is where pre-nups come in.
Despite their growing popularity, pre-nups remain widely misunderstood in England and Wales. Many assume they are only for the ultra-wealthy, when in truth, this is not the case.
Whilst pre-nups are extremely popular in the United States, more couples in England and Wales are entering into pre-nups because they have become a practical financial planning tool. Second marriages are becoming more common and individuals are marrying later, often with established wealth or businesses.
It is important to note, however, that the law in England and Wales is very different to that of the United States.
Unlike the United States, pre-nups are not automatically legally binding in England and Wales. However, this does not mean they are ignored in their entirety. They can be highly persuasive, even if not strictly binding, if entered into correctly.
The legal position changed significantly following the landmark decision in the case of Radmacher v Granatino. This case states that a pre-nup should be given effect if it is freely entered into by each party with a full appreciation of its implications – unless it would be unfair to do so.
It is important to note that any agreement must be fair, both at the time the agreement was signed, and at the point of enforcement. If the court deems that the pre-nup is unfair, it will depart from its framework.
For a pre-nup to carry real weight in a court, there are several principles that need to be satisfied when entering into the agreement:
- Both parties must be transparent about their assets, income and liabilities by way of full and frank financial disclosure
- Each person should receive independent legal advice to ensure they understand what they are signing
- The agreement should be signed at least 28 days before the marriage. This will demonstrate that there was no pressure or duress when signing the agreement
- The agreement must be fair. It is important to remember that even if both parties agree the terms of a pre-nup, the court retains the power to override a pre-nup if it fails to meet the parties’ needs, or leaves a party destitute.
What happens after the pre-nup has been entered into?
Even if the prenup has been drafted in accordance with the principles of Radmacher, it should be reviewed periodically in order to maintain enforceability.
For example, if there is a significant change in either party’s circumstances, such as a shift in the financial status of the parties or after the birth of a child, then it would be advisable to consider potentially adjusting the agreement to ensure it is still fair.
If it is the case that there has been no significant change, then the parties will need to sign a Deed of Confirmation stating the pre-nup has been reviewed and they want the existing pre-nup to remain in force as it is still fair.
Even the most carefully drafted pre-nups can be adjusted if fairness requires it, so it is important to remember that pre-nups are powerful but not untouchable.
Whilst pre-nups may seem unromantic at first, they are an important way to protect pre-marital assets, provide financial certainty, and reduce the risk of costly litigation; thus helping to minimise conflict and acrimony should the relationship later come to an end.
If you are considering a prenuptial agreement, seeking tailored legal advice at an early stage can help ensure your agreement is both fair and effective, and more likely to be upheld by the court should you separate.
By Simi Jakhu, Solicitor in the Family Law Team at DFA Law
Should you require specialist advice or assistance on nuptial agreements, call DFA Law on
01604 609560 or visit their website.
