A prenuptial agreement is a formal contract between two people prior to marriage or civil partnership, which sets out how their finances will be organised in the event of the breakdown of the marriage.
Prenuptial agreements (PNAs) are not formally binding in England and Wales. This is in marked contrast to many jurisdictions, including Scotland, the rest of Europe and in most other jurisdictions where PNAs are regulated by law and are therefore commonplace. Despite the lack of legally based rules, PNAs are regarded by courts as persuasive and often decisive in many applications for financial relief following the breakdown of a marriage.
Historically, it was regarded as contrary to public policy for a couple who were about to get married to make an agreement that provided for the contingency that they might separate. It was thought that an agreement making provision for separation might act as an encouragement to separate. In the past, therefore, such agreements were void and the court would pay no regard to them.
Times have changed, and this is certainly no longer the position accepted by the public. Many people entering a marriage with the sense and foresight to consider what would happen if things go wrong, wish to enter into these constructive agreements, akin to insurance policies, to try to protect their financial position in the event of divorce. Despite appearing somewhat unromantic, this safety net offers a peaceful alternative to the throws of legal proceedings and helps avoid leaving your financial future to the discretion of the court.
Will my prenuptial agreement be upheld in Court?
Presently, whether or not your PNA will be upheld in court, will depend on the court’s view having regard to a number of factors. If done properly, you can expect the agreement to be fully taken into account and it’s terms upheld.
Since the landmark Supreme Court decision in Radmacher v Granatino 2010  UKSC 42 the use of PNAs in the UK has grown rapidly. In Radmacher, the court said:-
“The court should give effect to a nuptial agreement [PNA] that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.
In order to persuade the court to uphold the agreement, the following should be dealt with:-
a. The Agreement must enable the parties and children to meet their needs and it must be fair. This is perhaps the main and most important clause. If the agreement does not enable the parties and children to meet their needs following a divorce, then the court are highly unlikely to uphold the agreement, even if all of the other formalities have been met.
b. Parties must sign of their own free will. The parties must enter into the agreement of their own free will and there must not be any undue influence or duress to sign the document.
c. Timing. Along with there being no duress, it is also essential that both parties have sufficient time to consider the terms of the document. A PNA should be signed at least 28 days prior to the wedding. If you are contemplating a PNA, I would suggest you consult with a lawyer a minimum of three months in advance of the wedding.
d. Financial disclosure. Both parties will need to provide full disclosure of all of their financial circumstances before the agreement is signed.
e. Legal Advice. Whilst this is not mandatory, it is highly advisable that both parties should take legal advice at the time agreement is drafted and sign a declaration confirming that they fully understand the document and its implications.
f. Contractual validity. The agreement must be capable of being enforced as a contract.
g. Execution. The agreement must be executed as a Deed.
Does a prenuptial agreement only benefit the wealthier party?
Critics against enforcement of PNAs argue that there are implicit gender dimensions to the issue. As Lady Hale pointed out in Radmacher “the object of an ante-nuptial agreement (PNA) is to deny the economically weaker spouse the provision to which she…would otherwise be entitled.” Lady Hale notes that it is usually, although not always, ‘she’, and argues that PNAs could leave women in a more vulnerable and ultimately worse off position than men.
The Supreme Court did, however, specify that the agreement is only to be binding “in full appreciation of its implications unless it would not be fair”. The court has specified that if devotion of one party to homemaking (including childcare) has left the other to increase their income and potential earning capacity it is “likely to be unfair to hold them to the agreement that entitled their partner to retain all that they have earned”. In addition to the other factors (above) the court will consider the parties’ contributions to non-economic aspects of family life when considering what weight to give to the PNA.
If prenuptial agreements are not strictly legally binding, why would anyone enter into one?
As above, PNAs can carry decisive weight. Case law is increasing in this area, and judges are showing a willingness to respect the wishes of the parties based on agreements freely entered into (and which meet the various criteria above).
This was expressed clearly in Radmacher:
“The reason why the court should give weight to a nuptial agreement [PNA] is that there should be respect for individual autonomy. The court should accord respect to the decision of a married couple as to the manner in which their financial affairs should be regulated. It would be paternalistic and patronising to override their agreement simply on the basis that the court knows best. This is particularly true where the parties’ agreement addresses existing circumstances and not merely the contingencies of an uncertain future”.
Furthermore, PNAs are common in cases where there is pre-martial wealth or inherited or gifted assets (say from a family members). They are a useful tool to enable the parties to set out at the commencement of their marriage how they want these assets to be dealt with, in the event of a later divorce.
Our family law team have experience in drafting PNAs from the most straight forward of documents to complex documents involving trusts and company assets. We are also increasingly being instructed by clients who have agreements drawn up in other jurisdictions and need an identical agreement in England and Wales.