ADVA 2013 Cyberstalking cyberstalking word cloud – ADVA version It is not unusual for a person contemplating marriage to be concerned about what may happen to their financial assets in the event that the marriage should fail.
The most common reason for this is that they enter into the marriage with substantially more assets than the other party. Not unnaturally, they want to protect those assets, not just for themselves, but often also for others, such as their children from a previous relationship.
And it doesn’t help that we have a discretionary system to sort out finances on divorce, meaning that it can be very difficult to predict what settlement the divorce court would order.
The answer in such a situation is to enter into a prenuptial agreement, although as we will see an agreement does not absolutely guarantee that assets will be protected.
It should also be pointed out that there are many other reasons for entering into a prenuptial agreement, including reducing the cost of a divorce settlement, protecting one party against the other’s debts, and simply keeping each party’s financial arrangements separate.
Before we look at how to get a prenuptial agreement we first need to consider exactly what it is.
In simple terms a prenuptial agreement is a written agreement entered into by a couple prior to getting married, setting out how their assets should be divided in the event of a divorce.
The agreement can cover what should happen in relation to all of the parties’ assets and debts, including in particular assets owned prior to the marriage, inheritances and business assets.
But a prenuptial agreement cannot deal with everything that may happen on a divorce. In particular, it cannot cover what arrangements should be made for any children of the marriage.
A prenuptial agreement is a complex document that should really be drafted by an expert family lawyer for one of the parties. And the other party should also take legal advice upon the contents of the agreement, before signing it.
There are two other important points to note.
Firstly, there should be a gap between the signing of the agreement and the marriage, to reduce the chance of one party being pressured to sign it. There is no set period for this ‘gap’, but when it reported on prenuptial agreements in 2014 the Law Commission recommended a period of 28 days. Certainly, as the Commission pointed out, the courts have expressed a reluctance to uphold agreements concluded on the eve of the wedding day.
The second important point is that before the agreement is signed each party must make full disclosure of their financial situation to the other. Without such disclosure it is of course impossible to know whether the terms of the proposed agreement are reasonable.
Of course, a prenuptial agreement would be of little value if the divorce court does not recognise it, and simply imposes its own settlement anyway.
Prenuptial agreements are not in fact binding upon the courts of England and Wales. However, that most certainly does not mean that the courts will ignore them.
In a famous case in 2010 the Supreme Court set out the legal status of prenuptial agreements in England and Wales:
“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.”
There are three things to note here.
Firstly, the agreement must be freely entered into. In other words there must be no pressure placed upon one party to sign the agreement – hence the 28 day period mentioned above.
Secondly, both parties must fully appreciate the implications of the agreement. This is why it is so important that both parties take legal advice, as indicated above. If they do not do so, then there is a much greater chance that the court will not uphold the agreement.
Thirdly, and perhaps most importantly, the terms of the agreement must be fair. What is fair is of course up to the court to decide. If the court does not consider that the terms are fair it will not uphold them, and will replace the unfair terms with orders of its own.
Generally speaking, it is very probable that the courts will uphold prenuptial agreements. As a High Court judge said in a recent case: “It is highly likely [the parties] will be held to these agreements in the absence of something pretty fundamental that vitiates the agreement. These agreements are intended to give certainty. Those signing them need to know that the law in this country will provide that certainty. Litigants cannot expect to be released from the terms that they signed up to just because they don’t now like what they agreed.”
For more information regarding prenuptial agreements, see this page.
Ian Walker Family Law & Mediation Solicitors are award-winning family solicitors and are recognised as one of the leading family law firms in the South West of England with services covering family law & mediation, divorce, child law, and arbitration. For expert advice, please contact the team.