When contemplating entering into a marriage or civil partnership the thought of entering into a pre-nuptial agreement is perhaps not the most romantic item on a couple’s list of things to do.
However, such agreements are not uncommon and can be incredibly useful documents.
Traditionally, in England and Wales, prenuptial agreements have long since been deemed as not legally binding and therefore generally not used as result. This has much to do with how family law is dealt with in the context of any disputes that may arise in any divorce or dissolution case.
The courts have long had a wide discretion when reaching decisions in family disputes, taking into account the needs of the respective parties at that moment in time and also always ensuring the needs of the children are given paramount consideration.
This model of family law therefore tends to lend itself against being bound by any agreement that might affect one of the parties to their detriment in a future dispute.
However, many other jurisdictions successfully utilize pre- and postnuptial agreements (the United States being a prime example) and they can be very effective in avoiding long and costly court battles.
The mood in England and Wales has shifted significantly towards the enforceability of such agreements with two major driving forces behind this shift in attitude. In the Supreme Court case of Radmacher v Granatino (2010) the court ruled that prenuptial agreements could be upheld if not ‘unfair’.
This was the first time that the courts recognized a prenuptial agreement and gave it significant weight.
Following that decision the Law Commission, in its report Matrimonial, Property, Needs and Agreement (2013), suggested that prenuptial agreements could be binding provided certain procedures are met. It is thought therefore that legislation will be passed in the near future providing for the enforceability of such agreements.
So what are the benefits of having a prenuptial agreement?
If a couple is entering a marriage and have significant assets that have been accrued individually then it is understandable they may wish to preserve these in any future disputes.
A prenuptial agreement could also make provisions for any future inheritance received by one of the parties and whom this would be dealt with. If one party is a high earner and the other is not then provision for monthly maintenance payments or perhaps a lump sum payment could be made.
A prenuptial agreement could also be viewed as a preventative tool to avoid future disputes. This is because it enables the couple to understand each other’s financial circumstances prior to entering into a marriage and being comfortable with any future settlement in the event of a separation.
However, it is essential to ensure that the couple receive independent legal advice and give detailed financial disclosure of their assets and income to ensure complete transparency and fairness.
There is a risk when entering into such an agreement that one party could be pressured into agreeing something that they are not comfortable with or that could leave them disadvantaged in the future. Although in this scenario it is possible any difficulties that may arise relating to finances at this point pre marriage could prevent a similar dispute happening in the event of a separation in the future.
There is a risk when entering into such an agreement that one party could be pressured into agreeing something that they are not comfortable with or that could leave them disadvantaged in the future. However, one of the purposes of having a prenuptial agreement is to iron out any potential disputes relating to finances at an early stage.
If, therefore, there is a suggestion of improper influence during negotiations, it is better to have this flagged up prior to the marriage rather than further down the line. It is for this reason that independent legal advice for each party is extremely important when negotiating the agreements.
Generally, prenuptial agreements will not provide for the future care arrangements for children as circumstances can change in a marriage. What was agreed and deemed suitable at one point may well not be appropriate at a later point in time and the needs of the children may well have altered during the marriage.
If one or both of the parties have children from a previous relationship then it is not uncommon to see financial provision for these children included within the agreement as well as provision for children of the new relationship.
The court in a future dispute will be very concerned over whether or not there is ample provision for the children’s needs and whether or not this is provided for in the agreement. If there were not then it is likely the agreement would not be followed.
Prenuptial agreements are an increasingly used tool in the modern day and there is momentum gathering to try and ensure their enforceability in the future. People who are perhaps entering into a second marriage or are of high net worth may be attracted to the framework that an agreement provides.
It is important to receive legal advice if you are contemplating entering into a pre- or postnuptial agreement in order to fully understand the advantages or possible disadvantages if any, of entering into one. There is a wealth of further information at the website of Natalie Gamble Associates: www.nataliegambleassociates.com