As the average age of people getting married for the first time continues to rise, it is more usual for couples to enter a marriage with pre-acquired assets and individual wealth. In addition, couples who have been married previously often have accumulated assets which they want to protect for other members of their family in the future.
As a result, increasing numbers of couples are choosing to prepare a prenuptial agreement before they get married. A prenuptial agreement is a formal agreement specifying how you intend to divide your assets should you decide to divorce in the future.
No. On divorce, financial applications can still be made to the court and the court’s power to resolve how assets should be distributed cannot be removed by a prenuptial agreement. However, the weight a court is now required to give to a prenuptial agreement is much more significant than it used to be.
When a financial application is made to the court on divorce, the law requires that the Judge must consider “all the circumstances of the case”, and a prenuptial agreement is a “relevant factor”.
To be upheld and therefore to be enforceable, the three stage test, established in the highly publicised case of Radmacher v Granatino [2010] must be met;
Finally, it must be “fair” for the parties to be held to the agreement in the circumstances as they are at the time of divorce. This means the more that circumstances have changed since the agreement was entered into, the more likely it will be that upholding it could have unfair consequences.
Absolutely. A contractually sound prenuptial agreement based on full financial disclosure and independent legal advice will be given significant weight as a “relevant factor” of the case in the event of a future divorce. If you are entering into a prenuptial agreement you should always assume that it will pass the three-stage test and therefore expect to be held to its terms.
Some people may think that opting for a prenuptial agreement is equivalent to saying, from the outset, that the marriage is going to fail. However, research shows that disagreements about money are one of the most common causes of marriage breakdown. There is therefore a powerful argument for stating that couples who communicate effectively about financial issues at the outset of their relationship will have a stronger and healthier marriage going forward.
No. The process surrounding the making of the agreement and the outcome it produces must always be fair and reasonable. It is very unlikely that an agreement will be upheld if it would leave one party destitute and the other in a strong financial position.
An agreement forfeiting a party’s right to make a financial application on divorce is also unlikely to be upheld.
If, however, both parties are starting the marriage from a position of reasonable financial independence, an agreement which seeks to give protection to each of them should be appropriate – bar any unforeseen events during the marriage that significantly change their circumstances.
This will depend on whether the prenuptial agreement makes suitable and fair provision for your former partner’s needs. If it does, there is a good chance that a prohibition on any further sharing of assets could be upheld. Generally, however, it is unlikely that a prenuptial agreement that waives all inheritance rights will be seen by the court as fair, as it has the potential to leave one of the parties in a precarious financial position.
The inherent stress involved in planning a wedding means that you should try and negotiate the terms of any prenuptial agreement as far in advance as is practicable. The time required will vary from couple to couple, depending on their circumstances. That said, the nearer to the wedding day the prenuptial agreement is completed, the greater the chance there will be for one party to seek to frustrate it on the grounds of duress or undue influence. In order to be given the best chance of being upheld, a prenuptial agreement should not be entered into within the 28 days immediately before the wedding or civil partnership ceremony.
This means that negotiations about the terms of the agreements should commence well in advance of this point. The more time spent on constructing and negotiating the agreement, the more likely it is that a court will decide that there was no pressure on either party and that the agreement was entered into freely, and therefore it is more likely to be upheld.
Entering into a postnuptial agreement once you are married is a way to effectively ‘update’ a prenuptial agreement. It is always sensible to review any agreement at regular intervals to provide for any subsequent change in circumstances.
The legal position of a postnuptial agreement is exactly the same as it is for a prenuptial agreement. Provided there is full financial information and independent legal advice is taken by the parties, there is a strong chance that the agreement will be upheld by the Court.
For more information, please contact our Family Law team on 01392 688 688.
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