A Pre or Post Nuptial Agreement is not binding in law.
This means that there is no legal statute which provides automatically for Nuptial Agreements to be upheld. Consequently, the court can potentially always overturn an agreement in part or completely. This is a key consideration for anybody entering into a Nuptial Agreement.
That said, it does not mean that Nuptial Agreements have no value as case law has made clear. Nuptial Agreements correctly entered into and which are fair, and provide for the parties’ needs, are to be given significant weight by the Court.
The leading case on nuptial agreements, Radmacher v Granatino, confirmed the position that:
“The Court 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”.
The key criteria here are that:
- the agreement was freely entered into – there were no vitiating factors, pressure or duress being put on one party; and
- the terms are fair – i.e. the Agreement does not leave one party in a predicament of real need, such that they are not able to meet their housing or income needs.
This must be at the forefront of everyone’s mind, including solicitors, when preparing Nuptial Agreements. An agreement which is not fair is likely to be overturned by a Court should it be challenged in the event of the breakdown of the marriage.
Such a situation arose recently in the case of SC v TC [2022] EWFC67.
This case concerned a husband and wife who entered into a Post Nuptial Agreement in 2014 following the husband having been unfaithful. The husband had been diagnosed with Parkinsons and, in the negotiation of the Agreement, told his solicitor “it makes no sense for me to have any assets in the long term. It is inevitable that one day I will have to stop working and need long term care….if [wife] and I are no longer married, then the only provision of care will be from the state…. In that case, best outcome for [us] would be for [wife] to own all assets as the sole owner…. In summary, my position is that [the wife] should have the maximum possible share of the assets on a breakdown of our marriage.”
By the time the marriage did break down in 2020, the husband was deemed not to have mental capacity to be able to engage in the proceedings as a result of his Parkinsons. The wife sought to uphold the terms of the Agreement, which saw her keeping c.£4m of a total pot of £5m, but this was contested by those acting for the husband, on the basis that his needs could not be met by the terms of the Agreement.
The Judge therefore had to weigh up:
- whether it would be fair to uphold the Agreement on the basis that it was entered into correctly at a time when the husband did have mental capacity, full financial disclosure had been provided, both parties had received legal advice and the husband had been clear in his instructions as to what he wanted; versus
- whether it would be unfair to uphold the Agreement because despite all of this the Husband would not be able to meet his needs from the financial provision set in the Agreement.
Ultimately, the Court considered that the husband had been in a vulnerable state due to his disease when entering into the Agreement and this, coupled with the fact that his financial needs (including his long term care needs as a result of his Parkinsons) would not be met by the Agreement, meant that it would not be fair to uphold the Agreement.
Therefore, instead of upholding the Agreement which would have seen the husband retain approximately £1m of a total pot of approximately £5m, the Judge ordered that the assets be shared 50:50.
This is a stark reminder to everyone that the Court can and will overturn Agreements if they are not fair.
For this reason, it is always advisable to consider including within any Nuptial Agreement, the ability to review the terms of it to ensure that as lives and finances change, the Agreement is updated so that it remains fair and that all parties’ needs can be met. Failure to do this, may lead to the parties finding that the Agreement they entered into and on which they wish to rely, is not worth the paper it is printed on.
Nuptial Agreements, properly entered into, can be an excellent wealth-planning tool and a sensible way of providing reassurance for a financially weaker party that in the event of the breakdown of the marriage, their needs will be met. They can also help avoid unnecessary and costly litigation that might otherwise arise in the event of a divorce.
If you are considering entering into a Nuptial Agreement or would like further information about them, please contact one of our specialist solicitors in our Family Law Agreements department who will be able to assist you further or contact us at here.
