31st March 2011
The has been a lot of press coverage relating to the use pre-nuptial arrangements. What are they?
Many people will have read in the papers last year about the case of Mr Radmacher and Ms Gravatino, which had important implications relating to the law on the recognition of Pre-Nuptial Agreements by the English courts. The Supreme Court, the highest court of appeal in the land, gave a decision which, while not making such agreements fully binding on the court in the event of divorce, took a big step towards that becoming likely in the future.
Unlike some other countries around the world, including some European countries, the courts in England had, before this case, refused on public policy grounds, to recognise the validity of Pre-Nutial Agreements. However, the Law Commission, which advises the government on legal policy issues, had as long ago as 1998 made recommendations that these sort of agreements should be allowed formal recognition when deciding the outcome of financial settlements following divorce, provided that the parties followed certain guidelines. These included:
- ensuring that both parties had given full details of their respective financial positions;
- ensuring both parties had taken independent legal advice; and,
- ensuring that the agreement is signed at least 21 days before the wedding.
The recent Supreme Court decision endorses these safeguards and sets out the basis for which Pre-Nuptial Agreements should be recognised by the courts on divorce. It is important to remember that the court's powers to deal with matrimonial assets have not been diminished. However, the court has, for the first time, made it clear that there is a presumption that, provided that the rules laid down by the court are followed properly, the agreement is fair and the situation is reviewed on a regular basis, the court should give effect to the agreement unless it would be inherently unfair to do so.
The use of these sorts of agreements should not be restricted to very wealthy couples. Even people with modest assets can benefit from a Pre-Nuptial Agreement, particularly in the case of second marriages and where parties have property and children from previous relationships, or which were acquired before meeting their spouse to be, or where one party has or expects to receive money or property by way of an inheritance. This can help to avoid family disputes in the event of death of either of the parties to the marriage
In addition, it is perfectly in order for the parties to a marriage to enter into agreements which identify and ring-fence 'non-marital' assets. This does not need to be done in the context of a Separation Agreement, but can be made at any time during the marriage to set out what would happen in the event that your marriage breaks down in the future. Again, given that the divorce rate in England and Wales is currently around 30 - 40%, this is simply good sense. The court has said that these Post-Nuptial agreements have a greater standing with the courts when deciding on the division of assets on divorce than Pre-Nuptial Agreements would.
Therefore, although it may not seem very romantic, it is well worth bringing up the issue of personal assets before relations break down. The alternative may mean that your family assets are at risk and you may find that your family will lose out. In many cases, properly formulated financial agreements can result the avoidance of expensive legal disputes.
If you have any questions about the issue of Pre-Nuptial Agreements, Post-Nuptial Agreements or Separation Agreements, please contact Andrew Hill in our matrimonial department.