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Pre-nuptial agreements – a quick snapshot

What is the legal status of a pre-nuptial agreement?

The key points on the current law are as follows:-

  1. When considering their role in a financial claim on divorce, the starting point is the legislation set out in the Matrimonial Causes Act 1973. The Court has regard to what we call ‘section 25’ factors and the judge is obliged to consider all the relevant circumstances of the case, including the pre-nuptial agreement;
  2. No agreement can override the legislation or prevent the judge from deciding on what the appropriate division of the assets is. This means that the agreement does not prevent either party from making an application to Court to determine the division of assets;
  3. If a pre-nuptial agreement is entered into, it will be a relevant circumstance of the case, to be considered by the judge. However it is not determinative. That said a pre-nuptial agreement is likely to have an impact on the judge’s decision in many cases. Following a Supreme Court decision in Radmacher v Granatino, 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.

Key factors to consider with a pre-nuptial agreement

  1. They must be entered into the agreement freely, without any force or pressure from the other or anyone else;
  2. There should be an element of both parties being on an equal footing, with the ability to freely negotiate the terms of the agreement.
  3. It is preferable, although not essential, for the terms to be negotiated as far in advance of the wedding date as possible;
  4. The Court will take into account individual circumstances such as the emotional states of the parties at the time of making the agreement;
  5. Both parties should be in possession of all the information material to the decision to sign the pre-nuptial agreement before doing so;
  6. There should be financial disclosure which will be included in the agreement so both parties can negotiate fully informed of the others financial circumstances.
  7. There should be an intention on both sides that the agreement should determine the financial consequences of any future breakdown;
  8. It must be fair:-
      • There is nothing unfair about a pre-nuptial agreement that seeks to ring-fence “non-matrimonial property” i.e. property that is owned prior to the marriage;
      • The longer the marriage lasts post the pre-nuptial agreement being signed, the greater the chance it may not be fair to hold the parties to it because of unforeseen changes in circumstances;
      • If the effect would be to leave one party with less than is required to meet their needs, while the other party is comfortably provided for, is likely to be unfair;
      • If needs and compensation (i.e. if there has been a loss of earnings as a consequence of a joint decision for one party to give up work to care for children) are adequately provided for, then further sharing of the assets may be prohibited. This limits a spouse’s ability to claim an interest in non-matrimonial property, such as inheritances, gifts and property owned prior to the marriage.

    As the law currently stands, pre-nuptial agreements are almost as good as binding, as long as they are fundamentally fair. However even if the pre-nuptial agreement is given decisive weight, the Court still have the power to make financial awards on divorce. It will only be one of the factors considered when the Court exercise their discretion to deal with any financial claim on divorce.

    Who knows what will happen to the legal status of pre-nuptial agreements when we leave the European Union. If England and Wales does leave the European Union as planned, the current law may change in some way, which could have implications for agreements entered into prior to that time.

    If you are thinking of entering into a pre-nuptial agreement and would like some further advice, please do not hesitate to contact Rayden Solicitors on 01727 734260.

    Rayden Solicitors are a specialist family law firm with offices in St Albans, Berkhamsted and Beaconsfield. If you require any assistance please do not hesitate to contact one of our specialists on 01727 734260.

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