Pre-nuptial agreements: rules and relevance

Posted on Thursday April 21, 2016

Following the Family Justice Council guidance released this month some media attention has been given to pre-nuptial agreements.

The FAQs section of the guidance informs that whilst pre-nuptial agreements have become increasingly prominent, for most people they will not be relevant on divorce. The reason given for this is because the guide has been aimed at those people who, when they separate from their partner, will struggle to meet both of the needs of any children of the family and their own needs. “Needs” in this case having the more elevated family law meaning: not just the absolute minimum needed to survive but an amount required taking into account the standard of living during the marriage.

Pre-nuptial agreements have however been recognised as important factors in some “high value” cases and they can be drafted to protect certain property on divorce, even if the parties are not multi-millionaires. The general rules in relation to drafting an effective pre-nuptial agreement are:

  • Both parties must enter into the agreement freely, without undue influence or duress, with a full appreciation of its implications;
  • There must have been full financial disclosure from both parties;
  • The agreement must be fair;
  • Both parties must take independent legal advice;
  • The agreement should be entered into at least 28 days before the date of the marriage;
  • The agreement should set out in which jurisdiction any litigation would be brought and that the agreement will apply in any jurisdiction in the world.

If the parties are not hugely wealthy then it is important to record within the agreement how the parties needs are to be dealt with. It is also important to remember that any such agreements can be reviewed and updated as appropriate after they have been drafted, for example, if a child is born to the parties. This would need to be reflected in the agreement and it should include consideration of how that child’s needs will be provided for.

If one party inherits a large sum of money during the marriage, it might be possible to draft a post-nuptial agreement, i.e. one created after the marriage, to protect the amount of that wealth that goes beyond providing for the parties’ needs. Again, the parties can revisit their financial position as it develops throughout the marriage and have a post-nuptial agreement as appropriate.

It will never be possible, under current legislation, to draft an agreement that completely prevents the Court from considering the financial position of the parties; however, a well drafted pre-nuptial agreement in the right circumstances can increase the level of predictability on the breakdown of a marriage in what is an uncertain area of law.

If you are considering separation, a pre-nuptial or post-nuptial agreement, please feel free to contact the Family Law Team at Mackrell Turner Garrett on 020 7240 0521.