Is the tide turning for Pre-Nups?

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Family Law Partner, Paul Jordan, assesses the growing importance of Pre-Nuptial Agreements

In a recent survey of specialist family solicitors, almost 70% predicted a rise in people seeking advice on a ‘pre-nup’ before tying the knot.

They were once regarded with scorn as an American fad, but with celebrity divorces grabbing the headlines, the rise and rise of the pre-nuptial agreement is hardly surprising.

Stuart Sangster, the latest ex-husband of serial divorcee Sue Sangster, had one – though not all celebs are as canny; just ask the reasonably well-known former husband of Heather Mills.

Over 80% of specialist family solicitors polled took the view that in the right circumstances a pre-nup can be an effective way to protect assets in divorce or civil partnership dissolution proceedings. Legally a pre-nup is no more than an arrangement entered into before marriage or civil partnership to attempt to regulate a couples’ financial affairs in the event of divorce. They used to be likened to having an inflatable lilo in the middle of the ocean: It might not save your skin (or in this case bank balance) but it’s better to have one than nothing at all.

However, the future prospects of the pre-nup have been given a boost by the courts and a recent Court of Appeal case (Radmacher –-v- Granatino [2009] EWCA Civ 649) appears to have upgraded the lilo to a life raft. As always in pre-nup cases the court’s decision is fact dependent. The Court of Appeal said that in the right instance the existence of a pre-nup could be given “decisive weight”. But even though the case involved assets worth millions of pounds and both parties were acknowledged to have fully understood what they had signed, the Court still went beyond its terms to make additional financial provision. So whilst it might be more life raft than inflatable it still sprang a multi-million pound leak. The ultimate beneficiaries were the children; the husband got fairly short shrift, just like the serial divorcee.

Even though not a sure-fired life (or bank balance) saver, in appropriate cases it will still be sensible to consider entering into a pre-nup. The (literally) million dollar question in some circumstances is whether it will be “for richer or for poorer” if you don’t have one?

In the leading judgement Lord Justice Thorpe observed that pre-nuptial agreements were not exclusively for the “super rich”. He gave the specific example of mature couples:- “…perhaps each contemplating a second marriage, who wish to regulate the future enjoyment of their assets and perhaps to protect the interests of the children of the earlier marriage upon the dissolution of a second marriage. They may not unreasonably seek that clarity before making the commitment to a second marriage.

Due respect for adult autonomy suggests that, subject of course to proper safeguards, a carefully fashioned contract should be available as an alternative to the stress, anxiety and expense of a submission to the width of judicial discretion.”

The Law Commission is currently reviewing this interesting area and will no doubt seek, in its public policy recommendations, to strike a fair balance between the right of the individual to autonomously regulate his or her financial affairs, whilst allowing the Court to retain its overriding duty to achieve fairness when redistributing assets on divorce and civil partnership dissolution.

So, we have not quite caught up with the United States and parts of Europe: yet. For the time being at least, the law in England and Wales remains that pre-nups are not enforceable ‘as of right’. Nevertheless the existence of a pre-nup is a factor which the courts are increasingly ready to consider, so whether it be a lilo or a life raft, anyone setting out on the high seas of matrimony would do well to consider taking one along, just in case the going gets rough.

If you would like further information about Pre-Nuptial Agreement then give Paul Jordan a call on 01271 372128 or email him at [email protected]