The Role of Pre-Nuptial Agreements in UK Divorce – Are They Legally Binding?

As the average age for getting married increases, along with more people getting married for the second or even third time, Pre and Post-Nuptial Agreements play an important role in protecting the non-matrimonial wealth and assets of spouses, especially in high net worth (HNW) divorce cases.

To help you understand whether a Pre or Post-Nuptial Agreement is something you and your partner wish to explore, below is a brief summary of what they are and their role in a divorce in England and Wales.

What is a Pre-Nuptial Agreement?

A Pre-Nuptial Agreement is an agreement entered into by a couple before they get married setting out how they will divide their property and assets should they get divorced. A Post-Nuptial Agreement is essentially the same, except it is made after the wedding takes place. Post-Nuptial Agreements are often entered into when a couple is considering a divorce but is working on trying to save the marriage. Having an agreement in place takes away the pressure of worrying about who will get the family home, pensions etc if separation proves inevitable.

Are Pre and Post-Nuptial Agreements Legally Binding?

The short answer is no. But, the Supreme Court in Radmacher v Granatino [2010] UKSC 42 held that when a judge was working out a couples Financial Settlement, weight should be given to a nuptial agreement if it is fair to do so.

How do the Courts decide if a Pre or Post-Nuptial Agreement is fair?

When deciding Radmacher, the Supreme Court examined significant family law cases including McFarlane v McFarlane [2006] UKHL 24. McFarlane established that fairness should be based on the principles of:

• need – i.e. it is fair to consider the needs of both parties to a divorce;
• compensation – this means that if one person is left financially stronger once both parties’ needs are met, the Court may award some compensation to the other person, and;
• sharing – i.e. each party to a divorce is entitled to an equal share of their joint assets unless there is a good reason otherwise (e.g. if some assets were acquired before getting married).

When deciding whether to uphold the terms of a Pre or Post-Nuptial Agreement, the Court will ask itself:

a)   Was agreement freely entered into,

b)   Did both parties understood the agreement, and

c)    Is reasonable to hold both parties to the agreement?

What steps should be taken to increase the chances of a Court upholding a Pre or Post-Nuptial Agreement?

There are a number of steps you can take to increase the chances of a Court giving weight to your Nuptial Agreement:

1. Each party should instruct an independent Family Law Solicitor.
2. Both parties need to make a full and frank disclosure regarding their finances.
3. The agreement should be carefully drafted, taking into consideration the financial disclosure and economic requirements of each party.
4. The document should be reviewed by each parties’ Solicitor before it is signed.
5. The agreement must be signed willingly and in full knowledge of its contents and implications.
6. The agreement should be reviewed regularly to ensure it remains fair, especially after the birth of any children.

Your Family Law Solicitor will explain the process of drawing up and entering into a Nuptial Agreement.

This is the perfect time to ask any questions you have and to make sure you fully understand everything contained in your Pre or Post-Nuptial Agreement.

What are the advantages and disadvantages of Pre and Post - Nuptial Agreements?

As with any legal agreement, it is important to understand the advantages and disadvantages. The benefits of a Nuptial Agreement are as follows:

• Provides clarity as to what is considered ‘non-matrimonial property’.
• Protection of assets in the event of legal separation.
• Provides certainty and transparency.
• If a party holds significant pre-marital debts, a Nuptial Agreement can be used to protect the other party having to repay those debts.
• Provision can be made for one spouse to receive compensation if they give up their career to take care of the home and children.
• Protection of business partners.
• Minimises acrimony on divorce.
• Inheritance beneficiaries (i.e. children and grandchildren) can be protected.
• Parties can agree to their own terms.
• Prevents financial opportunism.

The main disadvantages of Nuptial Agreements are as follows:

• Not legally binding – although the Courts will normally take a valid nuptial agreement into consideration.
• May result in the economically weaker party being penalised.
• Difficult to include financial provisions for children.
• May provide no inheritance rights and prevent claims under the Inheritance (Provision for Family and Dependants) Act 1975.
• Some parties find it emotionally distressing to enter into a Nuptial Agreement.

Final words

If you are considering entering into a Pre or Post- Nuptial Agreement or are getting divorced and an agreement is in place, it is essential to seek legal advice from a Divorce Law Solicitor. In the former situation, they can advise you on drafting a fair agreement that is likely to be upheld by the Courts if you and your fiancée divorce. In the latter scenario, a Family Law Solicitor will examine the agreement and advise you on whether it is fair or if it should/could be challenged.

For a free consultation regarding your divorce or drafting a Pre or Post Nuptial Agreement, please call our understanding and caring family law team on 0208 300 6666.