Pre-Nuptial Agreements, also known as Marital Agreements, are becoming increasingly popular and are no longer just reserved for the rich and famous. This may be because of increased media coverage but, as latest statistics indicate that 42% of marriages will end in divorce, perhaps couples are becoming more aware that, unfortunately, things may not always work out as they hope and plan.
There are many reasons for entering into a marital Pre-Nuptial Agreement. For example:
- A desire for financial security now and in the future;
- A significant disparity in income between you and your spouse;
- Ownership of a significant asset prior to the marriage, for example you already owned your own home;
- You intend to have children, or have children from a previous relationship;
- One or both of you anticipate receiving inheritance in the future;
- You have been married before;
- To assist with estate planning; or
- One person is entering into the marriage with a significant debt
The leading case on Pre-Nuptial Agreements is Radmacher, where the Court not only upheld an Agreement and allowed the Court to give weight to them but also provided guidance on what a Pre-Nuptial Agreement should contain and how it should be prepared.
The Court also clearly stated that it is not possible to enforce the Agreement as a contract or to exclude the jurisdiction of the Court to make orders, especially where the terms of an agreement do not necessarily reflect the way in which a Court might resolve financial claims on divorce.
This essentially means that the Court will not just ‘rubber stamp’ your Agreement unless it is fair and reasonable under all the circumstances and in line with the law’s approach to the division of finances upon divorce.
The Law Commission subsequently conducted research and produced a report, recommending that Marital Agreements be introduced into law by way of appropriate legislation. The recommendations are that there should be strict conditions in place for an agreement to be a ‘qualifying’ Marital Agreement including that:
- The agreement must be contractually valid
- The agreement must be in the correct form (i.e it has been made by deed and contains a statement signed by both parties that says they understand that the agreement is a qualifying nuptial agreement)
- The agreement must not have been made fewer than 28 days before the date of the wedding or civil partnership.
- Both parties to the agreement must first have received disclosure of material information about the other party’s financial circumstances
- Both parties must have first received independent legal advice
The report also recommended that it should not be possible for a party to waive their rights to obtaining disclosure and legal advice and that a qualifying Marital Agreement should be enforceable as a contract.
These recommendations are currently with the government for consideration and have not yet passed into law. However, if you are looking to enter into a Marital Agreement, it should be prepared in line with the recommendations of the Law Commission.
It is clear from the case of Radmacher and the Law Commission’s report that Marital Agreements should be fair. When a marriage ends it is crucial that any Pre-Nuptial Agreement provides for both parties’ financial needs. If you are considering entering into such an Agreement or your fiancée has suggested doing so, your respective financial needs should be met.
A Pre-Nuptial Agreement is intended to protect both parties and provide financial certainty should their marriage break down. This can be reassuring to couples and may also prevent costly and stressful disputes should the relationship end.