Are pre-nuptial agreements binding?

A pre-nuptial agreement is an agreement entered into by a couple prior to marriage which provides how their finances are to be divided in the event that they divorce. The agreement will define the assets that will not form part of the matrimonial pot for division on divorce.

Historically, it was against public policy for engaged couples to make such agreements. However, times have changed and in the landmark decision in 2010 of  Radmacher v Granatino, the Supreme Court held that ‘the 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 prevailing circumstances it would not be fair to hold the parties to the agreement’. Pre-nuptial agreements are not binding in England and Wales, however, the court may take such agreements into account when deciding on divorce how the assets are to be divided.

The general rule is that the court should give effect to a pre-nuptial agreement unless in all the circumstances it would be unfair to uphold the agreement.

There is nothing inherently unfair in parties wanting to ring-fence non-matrimonial assets and exclude them from the matrimonial pot on divorce.

For the court to uphold a pre-nuptial agreement the following are essential;

·  There must be no undue influence, duress or misrepresentation.

·  Both parties must provide full financial disclosure.

·  Both parties must have taken independent legal advice from a suitably qualified lawyer upon the terms of the agreement and its effect.

·  Both parties must understand the consequences of what they are signing.

·  The agreement should be signed at least 28 days before the wedding but this would not invalidate the agreement if the period is less e.g. where there have been ongoing negotiations as to the terms of the agreement.

·  Most importantly, the parties intend to be bound by the agreement.

In the recent case of Ipeki v McConnell, Mr Justice Mostyn rules that it would be wholly unfair to hold the husband to the agreement. He stressed the agreement did not meet the needs of the husband.

The facts of the case are as follows;

The parties met in 2003 and married in 2005. At the date of separation, they were both aged 45 and had two children aged 11 and 13. The husband prior to the marriage had worked as a concierge in a New York Hotel. The wife was an heiress of the Avon empire worth approximately £49 million.

The husband signed a pre-nuptial agreement 2 weeks before the marriage. Under the agreement, he was to receive a half share in any increase in the value of 3 properties owned by the wife at the date of the divorce. The husband received advice from his wife’s previous English Divorce Solicitor. The judge forced no weight to the agreement. He decided that the agreement was unfair as it did not meet the needs of the husband, in particular, to enable him to purchase a suitable home.

To ensure pre-nuptial agreement are upheld, the agreement needs to be fair to both parties and to ensure that reasonable capital and income needs are met.

If you would like to find out more information about the issues raised above, please contact Susan Taylor. 0161 883 0460 or email st@taylorking.co.uk