In this article we aim to address the most commonly asked questions about Pre-Nuptial Agreements.
What is a Pre-Nuptial Agreement?
A Pre-Nuptial agreement is an agreement that 2 people enter into before they get married so as to agree what should happen in relation to their finances in the event their marriage breaks down.
Are Pre-Nuptial Agreements legally binding?
In England and Wales there is no statute of piece of legislation that makes Pre-Nuptial Agreements binding. The court, on a marriage breakdown, has to consider Section 25 of the Matrimonial Causes Act 1973 which sets out various factors which the court shall have regard to in determining what a fair financial settlement between the parties should be.
In summary, the factors are:
- The income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;
- The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
- The standard of living enjoyed by the family before the breakdown of the marriage;
- The age of each party to the marriage and the duration of the marriage;
- Any physical or mental disability of either of the parties to the marriage;
- The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family;
- The conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
- The value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
However, there was a Supreme Court case in 2010 called Radmacher v Ganatino. The Supreme Court is our highest court and in this case the court decided that the Pre-Nuptial Agreement that the couple had entered into was binding on the parties because of some key facts:
- Both parties had had the benefit of legal advice – this has now gone slightly further into a position where both parties must take advice and understand the implications of the agreement they are entering in to;
- They had both made full financial disclosure to one another;
- They had entered into the agreement well in advance of their wedding.
The Supreme Court did consider Section 25 of the Matrimonial Causes Act 1973, but found that the agreement was binding.
Since then there has been another important case – Luckwell and Limata in 2014 – where the High Court Judge said that a Pre-Nuptial Agreement:
- Could not be allowed to prejudice the reasonable requirements of any children;
- It must have respect for autonomy;
- It must ensure there is nothing inherently unfair in the agreement making provision for existing non marital property;
- The longer a marriage lasts the more likely what was fair at the time of the agreement may no longer be now;
- It is likely to be unfair where one party is left in a predicament of real need while the other has sufficiency or more;
So the short answer is that yes, there is a presumption that Pre-Nuptial Agreements would be given effect on divorce if they were fair and as long as the key criteria in Radmacher are adhered to and the parties needs are met.
What if the needs of the parties are not met?
In the Luckwell and Limata case, the husband argued that as a result of a series of Pre-Nuptial and Post-Nuptial agreements he would get nothing on divorce. The court found that whilst the husband could not be left in dire need, his claims were significantly limited to meeting his debts and housing for his lifetime.
Why aren't Pre-Nuptial Agreements absolutely binding?
The way in which our law stands in England and Wales is that the court has the ultimate discretion in terms of making financial orders on divorce.
Should I get a Pre-Nuptial Agreement?
If a Pre-Nuptial Agreement is entered into properly with both parties taking independent legal advice, making full disclosure of their financial position and also ensuring they enter into the agreement well in advance of their wedding (there cannot be any suspicion of duress), then provided they make sensible provision for both parties, Pre-Nuptial Agreements can be hugely useful. Particularly if one party has pre-marital assets they want to protect or is likely to inherit substantial assets during the marriage.
They also make sense from a parental inheritance tax planning perspective.
Additionally, if couples are marrying for a second time, they are useful tools to protect children from an earlier relationship.
How much does a Pre-Nuptial Agreement cost?
How you choose to enter into a Pre-Nuptial Agreement will have an impact on cost.
We do not offer a fixed fee simply because without an understanding of the complexity of the financial position and an indication of how long it is going to take to negotiate an agreement, it is difficult to do so.
Our advice would be always to consider the collaborative process for Pre-Nuptial Agreements. This is a far more constructive way of reaching an agreement, and when you are considering marriage, that is key. The cost will then be dictated by the experience of the solicitors involved and the time it takes to reach the agreement. Generally, as a minimum you would be looking at six 2 hour meetings, plus some drafting and consideration time.
Do both parties need a lawyer for a Pre-Nuptial Agreement?
Yes. If the agreement is to have the best chance of being effective, then both parties need to actively take legal advice.
What should be included in a Pre-Nuptial Agreement?
As a guide, a Pre-Nuptial Agreement should include the following:
- All issues relating to your finances – particularly consider what might be pre-marital assets, for example a property or investments or pensions, consider what inheritances may be received. Then consider what you each have now and what you each want to do with your assets.
- Consider what the position would be if there were to have children together.
- Consider what would happen in the short term if there was a separation.
- Consider what might happen if there was a separation after a longer period – maybe think in terms of years together.
- What would happen if either of you could not work through ill health?
Inevitably there is an element of crystal ball gazing, and the reason Pre-Nuptial Agreements can fail is because the court has to look at the financial position at the time it hears the case. It is important therefore to ensure that the parties reasonable needs are met, ensure that the agreement is drafted after full financial disclosure, that there is legal advice taken by both, that the outcome is fair and there is no duress on either to sign it.
What is the difference between Pre-Nuptial Agreements and Post Nuptial Agreements?
A Pre-Nuptial Agreement is entered in to before you get married. A Post-Nuptial Agreement after you are married.
How long do Pre-Nuptial Agreements take?
The way in which you decide to negotiate your Pre-Nuptial Agreement will gear the amount of time it takes. If you approach it through traditional solicitor exchanges of documents, correspondence and telephone conversations, then it can be a lengthy process. It is for this reason we advocate using collaborative law.
Can Pre-Nuptial Agreements be disregarded?
Certainly, they can. If a Pre-Nuptial agreement is not properly entered into with full financial disclosure, legal advice on both sides, a substantial amount of time before any wedding (at the least 28 days) and on the basis that it is fair, then almost certainly it will be disregarded.
Pre-Nuptial Agreements are complex documents which need careful crafting if they are to be successful. There is no one size fits all.
Hawkins Family Law are family law specialists, meaning we have years of experience with cases regarding family matters and more. If you are thinking about entering into a Pre-Nuptial Agreement and would like reliable and accredited legal advice, speak to one of our team today.
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