Prenuptial Agreements
Essentially, Prenuptial agreements are advisory notices to the court. They do not have binding status, regardless of their form or content.
That may surprise many people because much more is heard about prenuptial agreements in this jurisdiction now than it ever was in the past and much has always been heard about pre-nups in other jurisdictions such as the various states of America.
In fact, prenuptial agreements had no effect whatsoever until 2012 in this jurisdiction, unlike many other jurisdictions where they have been binding for a very long time. Prior to 2012 they were destined to fail as an offence against public policy.
What happened?
The Supreme Court made a decision which says that providing a number of criteria are met, the court should pay close attention to a pre-nup (Radmacher v Granatino). However, it made it very clear that no court was to be bound by a pre-nup and the outcome of any financial dispute following divorce or dissolution remains discretionary, based upon statute and in the hands of the presiding judge.
What is the point?
If a prenuptial agreement is clear, fair and generally compliant then it is highly likely to determine the outcome of a financial dispute. For many people, that insurance, though not watertight, is well worth the investment in a pre-nup in the first place.
What do you need to be aware of?
Prenuptial Agreements: The Six Commandments
1. Time
Ideally these documents should be signed off at least 30 days before the wedding.
2. Independent advice
Both parties need to understand exactly what the document says and the best way to show this is for each party to have separate, independent advice. Best practice is to provide evidence for this independent legal advice within the document.
3. Fairness
This is a central concept in family law. It is highly fact specific and difficult to summarise in the abstract. If a pre-nup seeks to leave one party with no assets and the other party with significant assets – after anything longer than the most fleeting of unions – then it is likely to be considered unfair. If it is unfair then it may be ignored all together or significantly amended by the judge.
A pre-nup can fairly limit the claim a less wealthy spouse may have on a wealthy spouse but it can seldom protect all of the wealthy spouse’s wealth. Someone who seeks this outcome simply shouldn’t get married.
4. Disclosure
Each party to the agreement (and their lawyer) needs to know what the other party has got. This is disclosed by each party to the other. The disclosure should be attached to the agreement itself. The form of the disclosure will vary. It is acceptable to have a simple spreadsheet. It may be more appropriate to have full financial disclosure in a Form E where the assets are complex and/or of significant value. In reality, it is the complexity of assets which dictates this.
5. No duress or pressure
Both parties must enter into the agreement completely of their own free will. If there is any pressure to sign then the validity of the agreement will be severely compromised.
6. Qualifying Agreement
It should seek to be a “qualifying” agreement.
The Government is looking at amending the law in respect of pre-nups. This is not a priority but the Law Commission, which advises the government has suggested that in future, pre-nups should be qualifying and because of this it is best practice to make sure ANY agreement drafted now is said to be “qualifying” or “opts in” to the Law Commission’s recommended scheme.
Practitioners Top Tip
Supercharge the process by having a meeting with all parties and lawyers before the agreement is drafted. Make sure everyone knows what the document is intended to do. This can save a huge amount of arguing and redrafting later in the process.
Contact
Paradigm Family Law have a team of experienced lawyers to help guide you through the process of divorce, just waiting to hear from you.
If you would like more details on this or want to discuss your family law matter, please do not hesitate to contact James, Frank or Evelyn. Paradigm Family Law offers a free initial consultation with a top rated divorce lawyer and our fixed fee solutions cover financial proceedings from start to finish. You can call us on 01904 217225 or email us to [email protected].
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