A prenuptial agreement is a document designed to protect your assets in marriage. Whilst there is no one typical prenup agreement that can be copied to suit all parties, a bespoke contract can be drawn up to suit a specific couple in relation to their individual finances and assets.
For multi-national couples, the case of Radmacher v Granatino stands as a prime example as to why, even though prenups are not legally binding in the UK, couples should create two independent nuptial agreements to better safeguard their interests in the event that the union should fail.
Here we discuss the lessons that should be learned from Radmacher v Granatino, whilst assessing the differences between how German and English law view the dissolution of marriage and the implementation of marital agreements.
Radmacher v Granatino
When rich German heiress Katrin Radmacher (worth £100 million) divorced her substantially poorer French husband (a former investment banker turned academic researcher) who lived in England, a prenuptial agreement – more precise a German marriage agreement – became the focal point in the legal battle over dividing their assets.
In 2008, the High Court awarded Granatino with £5.85 million in ancillary relief. However, Ms Radmacher challenged this ruling by bringing up the German marriage agreement which she claimed should be accepted as valid prenuptial agreement in the Court of Appeal. The judges of the appeal court sided with her and reduced Granatino’s settlement to a mere £1 million.
Radmacher’s husband, Nicolas Granatino, contested the prenup, stating that he was unaware of the extent of his wife’s wealth when he signed it. However, the English court held up the prenup’s legitimacy, citing that it was binding under German law when signed.
The couple had decided to sign their prenuptial agreement in Germany at the insistence of the wife’s father. This meant that the contract would elect German law in the event of divorce, opting out of the standard matrimonial regime, and establishing a clear and authoritative legal framework for their marriage.
At the time, her jubilant lawyer explained outside the court that prenups could now offer couples the opportunity to decide the outcome of their divorce whilst the relationship is still ‘in the best of times’ rather than when said relations have already soured.
Before this game-changing case in 2010, prenups were largely considered “persuasive” but as a result of the ruling, now any parties who chose to enter into such agreements governed by English law should always assume they will be held to it if their marriage falters.
The differences in German and English law
Generally speaking, it is a safer or less risky approach to enter into a German marriage agreement and a separate English prenup if the marriage and/or divorce takes place in the UK to ensure that “all bases” are covered.
Under German law, marriage agreements must be drafted and recorded by civil law notaries who are highly qualified German lawyers and have a judge-like standing. In fact, German lawyers can only become notaries if they graduate among the top 3% of their clas. These German civil law notaries are obligated by German statutory law to advise and warn both parties, i.e. they must not be partial. Usually, therefore, there are no additional lawyers involved when German fiancees enter into a marriage agreement. So, both parties would either have to obtain additional legal counsel, which – from a German legal perspective – is pointless as long as these additional lawyers explain the German law side. However, if the additional legal advice comes from English solicitors, they would probably have a problem explaining the German law concept of Gütertrennung (separation of property) and what that means.
It’s also important to understand that in contrast to English law, the notion of ‘financial disclosure’ is not applied, as it goes against the German concept of privacy. A German notary would therefore probably not be thrilled to include this in his/her deed. And if they do, it would increase the costs of the deed significantly, because it would constitute two additional affidavits by the two parties that the inventories are correct. Under English law this is a mandatory requirement to make it legally binding.
Perhaps most significantly, specifically in the context of Radmacher v Granatino, the content of a German marriage agreement and an English prenup would not be identical.
A German marriage agreement is a binding contract and will stipulate strict separation of all property plus additional aspects. This is then set in stone, i.e. no later amendments or revisitations are required. If the parties want to amend or revise, fine, but they are not obligated to do so. The initial content of the marriage agreement remains valid, even if circumstances have changed dramatically. The German understanding is: No one has to enter into a marriage agreement, if they do, then it is and remains binding.
With divorce in Germany, the court has no discretion. The content of the marriage agreement is binding. The situation is very much different in England, where a German marriage agreement would most likely be considered “over the top” and too rigid.
However, the courts in England and Wales have become more accepting of prenups as proof of a couple’s intentions for the division of assets. Recently English law family lawyers have reported a rise in the number of couples drawing up prenuptial agreements. Even though under English law they can be overturned in court there are steps you can take to reduce the chances of the agreement being rejected, such as:
- Both partners must get separate independent legal advice before signing the contract. There must be no circumstances that raise questions about the parties’ free will or the level of knowledge they possessed prior to the contract. The agreement may be voided if there is any proof of error, deception, duress, or improper influence.
- The court must deem the agreement fair. It cannot prejudice the reasonable requirements of any children of the family, and should make inclusions for compensation for any loss of earning power following a joint decision that one spouse should give up a career to care for the family.
- You should also regularly review and update the prenup to reflect changes in your circumstances. The longer a marriage continues after a prenuptial agreement is written, the more likely it is that unanticipated changes in circumstances will make it unfair to hold the parties to its provisions. When young couples with minimal assets first get married, this is more relevant; when large assets have already accumulated before the marriage, it is less relevant. However, significant life events like the birth of a child or bankruptcy could happen soon after the prenuptial agreement is signed.
An agreement not professionally drawn up is less likely to stand up in court. If you and your intended have made the decision to get a prenup, first you must decide how your assets are to be divided up. Next, you will need to contact a solicitor to draw up the contract according to the parties’ agreement.
Where there is wealth, it is imperative to have a prenup, regardless of when you sign it – even if it is on the day of the wedding itself. But be mindful, that in situations where people of two different nationalities are joining together, the geographical location of where the agreement is made can have a great bearing on how it is interpreted of executed in the event of the marriage failing.
Should you need support in resolving marital disputes, or are planning for a secure future together, please do not hesitate to contact us for a confidential, impartial consultation on the options available to you.
