This article was originally published on leading sports law website LawInSport in August 2022.
This is the second in a series of articles exploring key family law issues facing athletes over the course of their careers. This article focuses on nuptial agreements and is relevant to athletes who are living in or relocating to England and Wales, whether married, engaged or contemplating a marriage or civil partnership. It will answer the following questions:
- What is a nuptial agreement?
- How can I protect my financial position before I get married?
- Is it possible to ensure financial security for my partner and me if I am already married?
- How enforceable is an English pre or post-nuptial agreement?
What is a nuptial agreement?
A nuptial agreement is an agreement entered into before or during a marriage or civil partnership with the intention of regulating a couple’s financial affairs during their marriage, and/or defining how their assets should be shared in the case of a marital breakdown or separation. These agreements not only allow you to ring fence your personal assets, but they also provide certainty and relative simplicity over what happens in the event of a relationship breakdown. Whilst not contractually binding in England and Wales (see below) it can be very helpful for a couple to clearly set out their financial intentions in the event of a divorce, at the start of, or even during, the marriage.
An agreement entered into before a marriage is often referred to as a 'pre-nuptial agreement'. If the agreement is entered into during the marriage, it is usually called a 'post-nuptial agreement'. The effect of both a pre-nuptial agreement and a post-nuptial agreement is the same. Under English law, the starting point with a divorce or dissolution is that marital assets should be divided equally (as detailed in the third blog in this series). A nuptial agreement allows you the possibility to more closely define the financial provision which you or your partner would receive if your relationship breaks down. The aim of a nuptial agreement is to both speed up and simplify the process of reaching an agreement.
Statistics suggest that the rate of marital breakdowns amongst elite sportspersons is considerably higher than among the general population. Indeed, approximately a third of football players’ marriages breakdown within a year of the players’ retirement1. While nuptial agreements are becoming increasingly common among professional sportspeople, they can still be difficult subjects to broach. Clearly the intention for both parties is for the nuptial agreement to be thrown into the back of a desk drawer never to be seen again!
How can I protect my financial position before I get married?
If you are engaged, planning to propose to your loved one or see a proposal on the cards, it is worth speaking with a family lawyer and considering a pre-nuptial agreement. These agreements are particularly important for athletes who have property, income streams and investments around the world2 and whose earning capacity may reduce after their late thirties.
These agreements were once considered Taboo and awkward. However, in recent years they have begun to hold significant weight in the English courts and are becoming increasingly popular. While the initial conversation with your partner on the topic of a pre-nuptial agreement is not what you would call romantic, your family law advisor can discuss how to explain the benefits of an agreement with your partner so that it is seen as a positive, joint decision. In any event, the benefits of a pre-nuptial agreement far outweigh a potentially uncomfortable initial discussion!
Pre-nuptial agreements can be tailored entirely to a couple’s wishes. For example, any income earned (from a certain source or job) during the couple’s marriage can be split equally: an athlete can pay their spouse a percentage of their salary and the parties can then keep their assets separate; your spouse can be entitled to a certain amount per year of marriage, or only be entitled to a financial lump sum if you have children... the list goes on!
Pre-nuptial agreements are not technically binding in England and Wales (see final section below), but they can carry significant weight in the event of a dispute upon divorce. For a pre-nuptial agreement to stand a good chance of being upheld, it is important to follow the four criteria below:
- You and your partner should each obtain independent legal advice (your lawyer should be able to recommend able and amicable lawyers for your partner to meet with who will then liaise with your own lawyer to finalise the terms of the agreement).
- The agreement should include a summary of both of your financial positions. This can take the form of a schedule, but please do ask questions of your partner’s disclosure if you have any.
- There should be no question of the agreement being signed under duress. This can be implied if, for example, the pre-nuptial agreement is signed off within 21 days of your wedding.
- The agreement must make fair provision for both parties and for the child(ren), if there are any, or it is intended that there may be in the future.
Pre-nuptial agreements limit the financial entitlement of one, or both, parties in a relationship upon separation. Therefore, the most difficult box to tick is ensuring that the agreement is fair. This can be difficult as you are planning a financial settlement for an unknown point in the future! If you are the wealthier party, we would, therefore, advise that you err on the side of generosity in a pre-nuptial agreement.
A pre-nuptial agreement should include strict confidentiality and non-disclosure agreements to ensure privacy for both parties in case of possible media interest. Nuptial agreements can also include provisions for alternative methods of dispute resolution to keep any future proceedings out of the English courts. Private arbitration is one example of this. Please see the third article in this series for more information in relation to the media and other options available to you if you do not want to go to court.
Is it possible to ensure financial security for my partner and me if I am already married?
It is possible for married athletes to enter into a post-nuptial agreement to regulate their financial relationship with their husband/wife both during and after their marriage. Post-nuptial agreements provide the same benefits to a couple as a pre-nuptial agreement. To be effective and persuasive, a post-nuptial agreement must tick the same four criteria boxes as are required for a pre-nuptial agreement, as set out above.
Married couples enter into post-nuptial agreements for a variety of reasons. They are often entered into to strengthen a pre-nuptial agreement, for example if the agreement was signed shortly before the wedding or one party’s financial position shifted significantly after the wedding. Post-nuptial agreements are often a good idea if a couple have had a period of separation to allow them to reflect on their relationship. They can clear the air and ensure that both parties know and agree what a relationship breakdown in the future would mean financially.
It is also possible to vary a pre-nuptial agreement via a post-nuptial agreement if you and your husband/wife decide that your previous agreement is not fair or is not appropriate as your circumstances have changed or may change in the future. You may, for example, like to arrange your finances differently if one of you has stepped back from work to look after your child(ren) and / or home life since entering the original pre-nuptial agreement. In any event, it is possible for nuptial agreements to include a review clause after, say five years after the birth of your first child, to ensure that the agreement continues to be fair.
How enforceable is an English pre or post-nuptial agreement?
Historically nuptial agreements were not legally binding in England and were thus not considered to be worth the paper that they were written on. This is because family law in England and Wales operates on the basis of judicial discretion, which can be widely applied in order to provide for the needs of the parties upon divorce. There is no strict formula for deciding how assets should be divided, a Judge will make an assessment of the needs of the parties, by considering the factors set out in Section 25 of the Matrimonial Causes Act 1973. It is therefore not possible to ‘contract out’ of providing financially for the needs of the weaker party, as this would be inconsistent with the statute.
However, 2010 case law3 changed the position and there is now a presumption that the English court will give effect to nuptial agreements provided that the four criteria detailed above have been met. While the presumption can be challenged, it is difficult to persuade the court to disregard a nuptial agreement which is fair and has been voluntarily entered into with independent legal advice and the benefit of financial disclosure, so long as it meets the needs of the parties, and any children of the family. Sportspeople are advised that they should expect to be held to any nuptial agreement that they sign in those circumstances.
While nuptial agreements are already considered powerful documents by English courts, we anticipate that they will be considered contractually binding in England in the coming years. Following the marked shift to the enforceability of nuptial agreements in 2010, a 2014 Law Commission Report4 recommended that a law should be enacted to introduce contractually binding 'qualifying nuptial agreements'. That law has not been passed, but in practice, nuptial agreements do hold sway in the family courts.
The validity of pre-nuptial agreements varies significantly in different countries. For example, while the enforceability of nuptial agreements in Northern Ireland and Scotland mirrors the weight that they are now being given in England and Wales, the concept of a nuptial agreement does not exist in the United Arab Emirates. In the United States of America, the weight attributed to nuptial agreement differs by state; in New York, nuptial agreements are afforded the same legality as other contracts and are strictly enforced by the courts, but in Washington State, the courts take a similar approach to England and Wales. Similarly, in Hong Kong (where the leading 2010 English case is relied on) and Japan, nuptial agreements hold substantial weight, yet they do not in Singapore.
If you split your time between two or more jurisdictions, it is important that you or your advisor takes legal advice to ensure that any nuptial agreement is valid in each relevant jurisdiction. Foreign elements add an additional layer of complexity to a nuptial agreement, but they can also increase the weight that the English courts attach to an agreement. For example, a New York pre-nuptial agreement would hold significant weight in England.