It is now some ten years since the UK Supreme Court gave its landmark decision in the case of Radmacher v Granatino  UKSC 42 on the use and effectiveness of prenuptial agreements. In doing so it moved the emphasis on to holding the parties to their bargain when setting out the principle that "the court should give effect to a 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 their agreement."
There is no doubt that the use of prenuptial agreements has become much more widespread in the last ten years, even where neither party has financial resources that they wish to preserve for their own future use and retention. Many such couples are keen to set out their own arrangements that will pertain on any divorce, as to the future organisation of their finances, in the hope of avoiding costly and lengthy litigation.
Interestingly, we are now seeing more and more prenuptial agreements being tested with an increasing number having been drafted and signed post the Radmacher judgment. So what are the criteria for enforcement? Unlike their commercial counterparts, prenuptial agreements are not enforceable automatically, but even so there are still a number of requirements and formalities which must be met if the prenuptial agreement is to be upheld, as follows:
- it must not seek to avoid responsibility for the financial needs of any children;
- each party must disclose to the other sufficient detail of their financial position – to include any pre-existing and/or inherited wealth – and answer any reasonable questions the other may have, albeit such enquiries are rarely made;
- it should be signed at least 21 days ahead of the wedding;
- there must be no suggestion of duress, fraud, undue influence, misrepresentation or mistake before entering into the prenuptial agreement;
- each party should have independent legal advice before signing.
When looking to enforce the terms of the prenuptial agreement observance and adherence to the above conditions is important. Many prenuptial agreements are lengthy by reason of the fact that they contain numerous recitals and acknowledgements that, for example, each party is happy with the financial information that has been provided and does not wish to ask further questions. They are included to try and reduce one party arguing subsequently that he or she was unaware of the position prior to signing.
It also pays to be bold when seeking to uphold the prenuptial agreement on divorce. The way in which financial claims are made does not afford any early consideration of its terms and so without some early and fast footwork, its content is likely to be looked at as just one of the other relevant factors the court has to consider. This may be extremely frustrating if, in fact, the marriage is short-lived, there are no children and what was agreed in the prenuptial agreement should prevail. In such circumstances it is possible to ask the Court to make an early determination as to whether the prenuptial agreement should be determinative of the financial arrangements to be made on divorce. Such applications are becoming more frequent and have become known as Crossley applications after the case in which they were first used to great effect.
In that case, the husband who was 62 had an independent fortune of approximately £45 million. He had been married previously and had 3 children. The wife was 50 years old and had her own fortune of approximately £18 million. She had been married 3 times previously. They signed a prenuptial agreement some 7 weeks before they married which essentially said “Both of them should walk away from the marriage with whatever they had brought into it”. The marriage lasted less than a year and the wife made an application to the Court to have her full financial position considered. The husband issued a cross-application seeking to hold her to the terms of the prenuptial agreement. The judge agreed and said that its terms were of such “magnetic importance” that it assumed greater significance than all the other factors the Court had to consider and was determinative of the position.
There is presently and unsurprisingly little political momentum for prenuptial agreements to be given any greater status in our law. It therefore remains the position that he or she who takes the most effective action at the earliest opportunity may well secure the greater advantage when asking the Court to determine the effect of the prenuptial agreement as an early issue.
This blog was first published in eprivateclient on 20 October 2020.
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You may also be interested in reading our other blogs about nuptial agreements and protecting wealth on divorce – see HERE.
About the Author
Jane Keir is a family lawyer and partner in the family and divorce team. She advises on the protection of wealth, both pre and post divorce and her breadth of experience both in negotiating discreet settlements and in taking cases to trial, mean that she is much in demand by individual clients and Family Offices alike.
By reason of its emphasis on wealth protection, much of Jane’s work involves working with other lawyers, accountants, actuaries, financial advisers, wealth managers and investigators in order to provide a thorough and comprehensive service to her clients. In addition, she has immediate recourse to all the other leading teams at the firm, including Private Client, Immigration and Real Estate.
"The firm as a whole provides a "Rolls-Royce" service, with particular expertise in cases with an international / multi-jurisdictional element"
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