Why enter into a pre-nuptial or a post-nuptial agreement?

Pre-nups and post-nups are becoming more commonplace and the Court in England and Wales is giving more weight to them.

These agreements seek to moderate the outcome on divorce where the Court's starting point for division of the assets is 50:50 unless there are good reasons otherwise.

On divorce, the Court has extensive powers to potentially distribute all of your assets including pre-marital assets, those which are inherited, held in trust or offshore and business assets, pensions and bonuses. This can make the court process uncertain, stressful and expensive.

You may have assets which you already own which you would like to protect, or you may envisage that your wealth will increase significantly during your marriage. This may be from earnings, inheritance or investment. You may want to ring-fence those assets to protect them from a claim on divorce.

Are pre-nups and post-nups legally binding under English and Welsh Law?

At present, neither a pre-nup nor a post-nup is legally binding. However, the attitude of the Court towards them has changed considerably over the years and following the 2010 Supreme Court case of Radmacher v Granatino these agreements can carry decisive weight and there would need to be unusual features for the Court to depart from the terms.

What circumstances does the Court take into account when deciding whether or not to uphold a pre-nup or post-nup?

An agreement is more likely to be upheld if it is challenged at the time of divorce, provided it was properly made; entered into without any undue influence and will not lead to hardship.

The best advice for those wishing to enter into a pre-nup or post-nup is

  • To have independent legal advice from a family lawyer (preferably one who specialises in such agreements) on both sides. This will help demonstrate that no pressure was applied on one party. The Court will want to know that both parties entered into the agreement with full knowledge and understanding of the agreement's implications
  • There must be full and frank disclosure of each other's financial circumstances. This can be done by way of a schedule summarising each person's capital (including pensions) and income positions.
  • The agreement must make suitable provision for any children of the family to ensure the agreement is not viewed as being unfair and therefore less likely to be upheld by the Courts.
  • It should be signed within good time before the wedding. We recommend that it is signed no fewer than 4 weeks beforehand. If concluded any closer than that it could denote undue pressure upon the financially weaker spouse, not to mention detracting from your enjoyment of the wedding preparations.
  • The Court will not uphold an agreement which is unfair to one of the parties. The longer the marriage, the less likely the agreement will be viewed as fair.

What sort of terms should the agreement include?

Every agreement is different although a typical agreement would seek to ring-fence assets acquired or inherited before the marriage or property inherited during the marriage.

The bottom line for the division of assets on divorce is to meet the "needs" that you both have. "Needs" means providing appropriate accommodation, the right level of income (or capitalised income) and if appropriate suitable pension provision. This will be influenced by the standard of living enjoyed during the marriage. A pre-nup is more likely to be viewed as fair, and therefore upheld, if it ensures that both your needs and the needs of any children of the family are met appropriately.

What if you are a foreign national and/or you may not continue to reside in England and Wales for the foreseeable future?

We are experienced in drafting prenuptial agreements where there are international elements. It may be that one of you is not from England and Wales and there are assets abroad or you may not intend to remain living in England and Wales for the foreseeable future. In those circumstances we may recommend having a dual agreement which would co-exist alongside an English pre-nup. We would normally expect to work with foreign counsel to achieve this.

How can we help?

In the first instance, we can advise you as to whether it is advisable to have a pre-nup or post-nup and suggest suitable provision which could be made for your spouse in the event of the breakdown of the marriage which would be likely to satisfy the court's requirements. We will then help you collate and present your financial disclosure and draft the agreement. If necessary, we can help put your spouse in touch with another family law specialist so that he or she can obtain advice.

We are also able to advise the financially weaker party on the effect of a pre-nup instigated by their future spouse on their rights; whether it is to their advantage, financially or otherwise, to enter into the agreement and whether the provisions of the agreement are fair. If appropriate we can negotiate on your behalf with the other party's solicitor to improve the proposed terms.

Costs

We will be able to give an estimate of the likely cost whether it involves advising on a draft pre-nup, or taking instructions and drafting a pre-nup.