Do prenuptial agreements work? Are they binding?

What are prenuptial agreements? Prenuptial agreements are agreements entered into, PRE/before marrying or entering into a civil partnership to protect and ring-fence the assets and financial interests of one, or the other, or both parties about to marry. What about the romantic element of marriage? Yes?…Not really, no. When it comes to prenuptial agreements, romance

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What are prenuptial agreements?

Prenuptial agreements are agreements entered into, PRE/before marrying or entering into a civil partnership to protect and ring-fence the assets and financial interests of one, or the other, or both parties about to marry.

What about the romantic element of marriage?

Yes?…Not really, no. When it comes to prenuptial agreements, romance is dead. As in any prudent business, when negotiating a business venture, it would be short-sighted of lawyers not to protect your interests, or at least attempt to do so, by considering all contingencies including what happens when things go wrong. How can exposure financially be reduced or avoided? How can damage be limited?

Do I really want to marry someone who should be sharing their life with me, but wants me to sign a document discussing how to exit a marriage so close to being married?

You can look at it that way. Another way you can look at such a document is to give certainty to what you have and what you do not have. You know where you stand. Provided all financial interests are disclosed, there is honesty and integrity from the outset. There is an openness about financial information prior to entering into the marriage.

What is worth protecting?

Family money; inheritance gifts; properties and business owned prior to entering into marriage. The list goes on.

Treatment of prenuptial agreements in the English Courts

In the United States of America, prenups are far more accepted and established than in English Law. Broadly speaking, they are binding, save in the event that they were entered into too soon before a marriage or civil partnership, or the agreement was entered into under duress.

The position in English Law is very different. They were historically not binding at all. Then they became persuasive documents with the Courts taking a position that they could be considered alongside factors dictating finances under section 25 of the Matrimonial Causes Act 1973, but could not be mutually exclusive of section 25 factors.

Safeguards were generally accepted to prove the validity of a prenuptial agreement, whether binding or persuasive that:

i. There was to be full financial disclosure between the parties beforehand;
ii. Each party received independent legal advice;
iii. The agreement should not be entered into less than 21 days before the marriage;
iv. The agreement was a contractual document enforceable in the law of contract;

As a contractual document, the intention of the parties to be bound by a prenuptial agreement could be considered in terms of bargaining power, duress, undue influence, misrepresentation.

The milestone case of Radmacher v Granatino [2011] 1 AC 534, now sets out the starting point relating to prenuptial agreements.

i. ‘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’;

ii. The document cannot be contractual because whatever is agreed will be subject to section 25 of the Matrimonial Causes Act 1973 being applied;

iii. No agreement can override the 1973 Act;

iv. Whatever is decided must be fair having regard to all of the circumstances.

There have been several cases, developing the treatment of prenuptial agreements since the Radmacher ruling, but they are generally case specific according to the particular circumstances of husband and wife.
Examples include, entering into an agreement, without having received independent legal advice; considering whether even if you received such legal advice, you ever had a choice to argue the agreement, or were forced into signing; whether there was full financial disclosure, or the hiding of assets.

drosen-2-sbProfessor David Rosen is a Solicitor-Advocate, partner and head of litigation at Darlingtons Solicitors LLP. He is an honorary professor of Law where he lectures regularly in fields of anti-corruption, anti-fraud, and runs a course in advocacy and a pro bono surgery. He is a Certified Fraud Examiner, a member of the Society of Legal Scholars, and Resolution, amongst others.

David Rosen • Family law • Uncategorized

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