ARE PRE-NUPTIAL AGREEMENTS LEGALLY BINDING?

In this fourth #12DaysOfChristmas #12DaysOfFamilyLaw we answer the question… are pre-nuptial agreements legally binding?

PRE-NUPTIAL AGREEMENTS ACROSS THE UK

A pre-nuptial agreement is a legal agreement made between two individuals before they marry with a view to establishing - or at least influencing - the division of finances in the event of separation or divorce. Even during the Christmas season of peace and goodwill, now may be a good time to consider how best to protect you and your family.

The position in England and Wales

Are pre-nuptial agreements legally binding?
This is a question we are asked a lot. In short, pre-nuptial agreements are not legally binding in England & Wales. They cannot stop a spouse from applying to the court for financial provision from the other spouse and cannot stop a judge from deciding on an appropriate division of assets on divorce which is contrary to the agreement.

People are often surprised by this answer as the position is very different in countries close to us. For example, pre-nuptial agreements are legally binding in Austria, France, Greece, Luxemburg, Portugal and Sweden.

So why enter into a pre-nuptial agreement?
Whilst pre-nuptial agreements are not legally binding of themselves, they are a relevant circumstance of a case to be considered by a judge. In the 2010 Supreme Court case of Radmacher v Granatino, the highest court in England & Wales made it clear that a court should give effect to a pre-nuptial agreement 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 the agreement. This essentially means that if a pre-nuptial agreement is drafted properly, it is likely to have a substantial impact on a judge’s decision in many cases.

What can I do to increase the likelihood of a court upholding the pre-nuptial agreement?
Breaking down the judgment in Radmacher v Granatino, parties entering into a pre-nuptial agreement should consider the following:

  • Is the pre-nuptial agreement freely entered into?
    • Are the parties entering into a pre-nuptial agreement of their own free will without any pressure?
    • Do the parties feel that they are on an equal footing and freely able to negotiate the terms of the agreement?
    • Have the parties signed the agreement as far in advance of the wedding date as possible and at least 21 days before that date?
    • What emotional state are the parties in at the time of drafting and signing the pre-nuptial agreement? How old are they? How mature are they? What relationship experience do they have?
  • Do the parties have a full appreciation of the implications of the pre-nuptial agreement?
    • Have the parties received specialist independent family law advice from a solicitor in England or Wales?
    • Do either of the parties have a connection with another country and, if so, has that party received specialist independent family law advice from a solicitor in that country?
    • Do the parties have all the relevant information material to their decision?
    • Do the parties intend to be bound by the terms of the pre-nuptial agreement?
  • Is it fair to hold the parties to the pre-nuptial agreement?
    • Has the pre-nuptial agreement provided for the reasonable requirements of any child or children of the family? If the answer is no, it will not be considered fair.
    • Does the pre-nuptial agreement leave one party in a state of real need, whilst the other party is comfortably provided for? If the answer is yes, it is unlikely to be considered fair.
    • The longer a marriage lasts, the greater the chance the pre-nuptial agreement may not be fair because of unforeseen changes in circumstances, for example the birth of a child, a bankruptcy, or the long-term illness of one party. It is prudent to include a review clause in the pre-nuptial agreement that triggers a review of the terms upon a significant change in circumstances.

The position in Scotland

The basic position in Scotland is the same as for England and Wales in that a pre-nuptial agreement entered into north of the border cannot stop a spouse from applying to the court for financial provision from the other spouse and cannot stop a judge from deciding on an appropriate division of assets on divorce which is contrary to the agreement.

However, as in England & Wales, pre-nuptial agreements are still of significance north of the border and perhaps even more so. In Scotland, the courts have repeatedly expressed the view that written agreements entered into by parties are contracts which the courts should - all other things being equal - be reluctant to interfere with. Provided the parties entered into the pre-nuptial agreement of their own free will, were not coerced into doing so and that it was fair and reasonable when it was entered into then the parties can generally expect to be bound by it.

A specific difference between Scotland and England & Wales is that there is no requirement north of the border for the parties to have signed the pre-nuptial agreement at least 21 days before the date of marriage. It is also worth emphasising that the Scottish legislation on financial provision upon divorce, the Family Law (Scotland) Act 1985 provides “the terms of any agreement between the persons on the ownership or division of any of the matrimonial property or partnership property” as the first example of a “special circumstance” which may justify departure from the general default rule that “fair sharing means equal sharing”.

UK wide summary

If a pre-nuptial agreement is drafted properly, it is likely to have a significant impact on a judge’s decision in many cases and is therefore an extremely effective tool in wealth protection. It is therefore very important to seek specialist independent family law advice from a solicitor to have the best possible chance of your pre-nuptial agreement being upheld.

To read Day 1 in our 12 Days of Christmas series on self care tips during a divorce, click here

To read Day 2 in our 12 Days of Christmas series on why you need a Will, click here

Read Day 3 in our 12 Days of Christmas series on full financial disclosure here: England & Wales; Scotland

Disclaimer: This content does not present a complete or comprehensive statement of law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

 

Who to contact

Caroline
Gillespie

Partner and Head of Family Law, Scotland , Glasgow

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