The concept of a prenuptial agreement entered into by a couple prior to getting married was one which used to be seen as the preserve of high-net-worth individuals and celebrities, but this has changed in recent years.
The drivers for that change have included the increasing number of couples getting married for the second or third time. According to the latest Office for National Statistics (ONS) figures,
over 30% of all marriages involve people entering a subsequent union.
In circumstances such as these, people are far more likely to enter into a marriage or civil partnership having already accrued a degree of personal wealth in terms of earnings, property and business interests, etc. They are also more likely to have children from a previous relationship, and to wish to protect the assets they are taking into the marriage in order to be able to one day pass them on to those children.
In circumstances of this kind it’s only natural for people to want to protect the assets they bring to the marriage, especially if there is an imbalance between the wealth enjoyed by the two parties.
What is a prenuptial agreement?
In simple terms, a prenuptial agreement is a contract, agreed and signed by both parties before marriage, setting out how the assets which they bring with them to that marriage will be divided in the event of a divorce.
For many years the advice given by legal experts was that a prenuptial agreement was not legally binding, but more recently this situation has become more nuanced. The first big shift happened in 2010, with the case of Radmacher v Granatino.
Katrin Radmacher was heir to a large paper industry fortune whilst Nicolas Granatino was a banker. At the time of the marriage, in 1998, both parties signed a prenuptial agreement in front of a notary in Germany, stating that neither would benefit from the property belonging to the other in the event of a divorce.
After being married for 8 years, during which time Mr Granatino left his £120,000 per annum job at JP Morgan and Co to pursue a career in academia, earning an annual salary of £30,000, the couple separated.
During divorce proceedings in June 2008, Mr Granatino applied for financial relief, and the High Court awarded him £5,560,000 to cover his annual income for life, a house in London and Germany so that he could see his children and regular payments for each child.
The judge making this ruling stated that they had taken the prenuptial agreement into account but that, since Mr Granatino hadn’t taken legal advice when he agreed to it, and the couple had since had children, the importance of the details of the prenuptial agreement had diminished.
Ms Radmacher successfully appealed this decision, with a ruling stating that the prenuptial agreement should be given decisive weight and that, while the fathering requests could be met, Mr Granatino’s long term requirements should not be funded through Ms Radmacher’s inheritance.
The final part of this legal saga came when Mr Granatino appealed to the Supreme Court, which dismissed the appeal, ruling that the prenuptial agreement was legally enforceable and Mr Granatino had no right to back out of the promise set out in the agreement.
Perhaps most significantly, the Court stated that pre and post nuptial agreements have ‘magnetic importance’ and should be complied with unless it can be demonstrated that they were unfairly drawn up or would have an effect that is unfair.
Further case law
More recently, the case of MN v AN demonstrated the shift in the law brought about by the Radmacher v Granatino case, in that it reinforced the fact that the courts are likely to be of the view that valid prenuptial agreements should be upheld in England and Wales.
In this particular case the couple had married in 2005, at which time the husband was 44 and entering his second marriage, with two children from a previous marriage, while the wife was 33 and had never been married before, and nor did she have any children.
When initially asking for a prenuptial agreement to be drawn up prior to their marriage, the husband was worth £32.5 million, while the wife had assets of £62K.
After a lengthy and sometimes fraught negotiation a prenuptial agreement was eventually made which stated that, in the event of a divorce, the wife would receive £500 thousand for each year of marriage, up to a maximum of £12.5 million, as well as 50% of the family home on either the 8th anniversary of the agreement or the birth of any children.
The wife would receive 50% of the net matrimonial assets if this proved to be of greater value than 50% of the family home, however, as well as £60 thousand per years in child maintenance, index linked to inflation, and any school or medical fees for the children.
After 25 years the prenuptial agreement would lapse. In general, the total amount the wife was able to receive was capped at 42% of the net worth of the husband at the time of the divorce.
The marriage broke down in February 2019, at which point the husband had a net worth of £44 million, while the wife had £600 thousand in her own assets and £2 million received in gifts from her husband. The couple had two children, aged 14 and 15, and a London townhouse, purchased in the husband’s name, which was the family home.
The terms of the prenuptial agreement, which the husband wished to enforce, stated that the wife would receive a £7 million lump sum and remain living in the family home until 2030, at which point the proceeds of the property would be divided.
As an alternative, the husband offered to sell the family home and give the wife £11.5 million. The wife refused, claiming that the prenuptial agreement was unfair on the grounds of her having signed it under duress – she asked for £18 million, totalling 40% of the assets overall.
The judge in the case ruled that the prenuptial agreement was fair, however, and awarded the wife 26% of the total assets, including a £7 million payment and £4.75 million in housing. The ruling reflected the fact that the wife had taken independent legal advice before signing the prenuptial agreement, and that the result of abiding by the agreement was fair in wider terms.
Are prenuptial agreements legal in the UK?
Judgements such as those cited above have created the conditions in which a prenuptial agreement is likely to be upheld by a court considering post-divorce financial arrangements, provided it has been entered into in the right spirit.
The conditions which apply to any prenuptial agreement, and which need to be met for a court at some point in the future to take the stipulations of the agreement on board, are as follows:
- Both parties agreeing to and signing the prenuptial agreement need to have taken independent legal advice before agreeing to the terms.
- Both of the parties need to have provided a full disclosure of the assets which they are bringing with them into the marriage. The disclosure needs to have been completed in full and in detail before negotiations on the terms of the prenuptial agreement are entered into.
- Neither of the parties should have been placed under any pressure to agree to the prenuptial agreement (it should be noted that the ruling in the case of MN v AN found that one party insisting on a prenuptial agreement as a condition of the marriage taking place didn’t count as undue pressure).
- The prenuptial agreement should not have been drafted less than 21 days before the date of the actual wedding or civil ceremony.
As well as being drafted in accordance with these strict conditions, a prenuptial agreement should be revisited periodically and revised if needed in order to reflect any shift in the financial status of the two parties. A failure to do so could result in a court deciding that the agreement was no longer fair. The details likely to be included in any prenuptial agreement include the following:
- The assets belonging to each party, such as stocks and shares, savings and properties
- An explanation of what will happen to the family home in the event of a divorce
- Details setting out who will be responsible for clearing debts amassed by either party during the course of the marriage or civil partnership
- Details of the assets which the children of any previous relationships will be entitled to following any divorce proceedings
As well as being signed by the parties themselves, the prenuptial agreement needs to be signed by two independent witnesses, one on behalf of each party. The witnesses need to be over the age of 18 and can’t be family members. As well as their names, signatories need to set down their address and details of their employment.
Can you write your own prenup without a solicitor ?
While you can technically draft your own prenuptial agreement in the UK, but it’s crucial to be aware of the significant risks involved.
While doing it yourself might seem like a cost-effective and simple solution, prenuptial agreements are legally complex. A poorly drafted document may not hold up in court, and even a minor error could result in the agreement being deemed unenforceable.
To ensure your prenup is fair, legally sound, and enforceable, it’s strongly recommended to seek advice from a family law solicitor. This professional guidance can save you substantial time, stress, and money in the future.
Should you be planning a marriage, or have recently entered into a union, and require assistance in the creation on a pre or post nuptial agreement, please contact our family law solicitors at Buckles for a confidential consultation.
Equally, should you need support navigating the dissolution of a marriage, our experts in divorce law can offer you invaluable, impartial advice on your options.
