A pre-nuptial or pre-marital agreement is an agreement made by a couple before they marry or enter in to a civil partnership. It sets out how they would wish to regulate their affairs and divide their assets if they later divorce or have their civil partnership dissolved. In those circumstances, the terms of the Agreement can then be presented to the Court by way of a Consent Order Application.
Pre-nuptial agreements can define and protect the resources belonging to a party which exist prior to the marriage and possibly those acquired afterwards. This is often when one party brings a significantly greater share of assets into the marriage. The Agreement can include both personal and business assets and, as is often the case, inheritances. In addition, a pre-nuptial agreement can guard against very costly and lengthy disputes in circumstances where no Agreement is in place.
Up until 2010, pre-nuptial agreements were usually unenforceable as they were viewed as being against public policy. However, in 2010 the Supreme Court in Radmacher v Granatino completely altered the legal landscape by showing Courts can and should be able to give effect to a pre-nuptial agreement, providing it is freely entered in to by each party and with a full understanding of its implications, unless circumstances mean it would not be fair to hold the parties to such agreement.
Although pre-nuptial agreements are not absolutely binding and enforceable in all cases, they have increasingly been utilised with Courts often applying the terms therein. The Court’s oversight and final approval of fairness still remains firmly in place. This ensures a party will not be left in real need, especially when minor children are involved. When minor children exist, their welfare will always be the Court’s first consideration.
The reasoning behind the Court’s shift since 2010 is that there should be respect for the freedom of parties, with individuals being able to voluntarily make their own decisions regarding their financial future. Generally speaking, pre-nuptial agreements can massively influence the financial parameters of settlement, when compared with what the Court may otherwise consider and impose in its absence. A pre-nuptial agreement is of “magnetic importance” to any judicial thinking.
There can be preventing factors which could render a pre-nuptial agreement unenforceable, in addition to a failure to sufficiently provide for an individual’s needs. These can include fraud, misrepresentation (including non-disclosure), other omissions, duress, and undue influence. The responsibility to substantiate any such claims would fall on the person relying on them.
In 2023, there were a number of cases before the Courts whereby the validity of an existing pre-nuptial agreement was challenged.
As a result, Courts will now perform a two-stage exercise to test any agreement. First, they will consider whether any circumstances existed surrounding the making of the pre-nuptial agreement which could affect the weight that is given to it. Second, examination will then be undertaken as to whether the pre-nuptial agreement operates fairly, taking into consideration the factors contained in the Matrimonial Causes Act 1973.
All in all, the watchword of a pre-nuptial agreement remains to be “fairness” i.e. whether it is fair to hold the parties to the Agreement, given the passage of time and what their current circumstances may be.
To paraphrase Mostyn J, in every needs case there is a range of possible standards of living of the parties which the Court could exercise its discretion within, and would be free of Appellant review. If that range was looked at as a “shelf of books bracketed by bookends”, the bookends could be quite far apart. As long as the pre-nuptial agreement is somewhere within the “bookends”, then the Agreement would be upheld.
Giving thought to a pre-nuptial agreement in the months leading up to a marriage or civil partnership should not be underestimated. It can offer the peace of mind of having extra security and clarity between parties should the relationship one day break down. This is infinitely preferable to the possibility of “rolling the dice at Court” to argue which side of a “bookshelf” the Judge should award.
If you are considering a pre-nuptial agreement or your partner is proposing one, it is essential to receive advice from an expert family lawyer. Here at Dunn & Baker Solicitors, we have a specialist team who are happy to assist. Contact the Family Team to arrange your free initial consultation:
Exeter 01392 285000 Cullompton 01884 33818